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On December 1, 20X1, Northern Consulting Ltd. signed a contract with University Inc., which obligated Northern to provide University with 18 hours of consulting services

On December 1, 20X1, Northern Consulting Ltd. signed a contract with University Inc., which obligated Northern to provide University with 18 hours of consulting services per month from January through December of 20X2. The contract requires University to pay a total of $56,160 for these services, with payments of $4,680 due at the end of each month. Northern has provided similar services to university in the past and has always collected its fees on a timely basis.

ASPE Step 2. The amount of revenue to be received can be reliably measured.

Amount Northern will receive for each hour of consulting services provided:

ASPE Step 3. It is probable that the customer will pay for the goods or services when payment becomes due. University has always paid Northern

on a timely basis, so it is probable University will pay the bill as it comes due each month. Northern can recognize revenue of each time it provides

University with of consulting services.

IFRS Step 1. Identify the contract with the customer, specify its terms, and evaluate the probability the customer will pay the transaction price when it becomes due. The contract is between Northern and University for 20X2.

Identify the terms as follows:

What will Northern provide University in 20X2?

Total price of the contract:

Evaluate the probability the customer will pay the transaction price when it becomes due.

has always paid northern on a timely basis the bill as it comes due each month.

IFRS Step 2. Identify the separate performance obligations in the contract.

What is the separate performance obligation in this contract?

How many separate performance obligations are in this contract?

IFRS Step 3. Determine the transaction price

Transaction price:

IFRS Step 4. Allocate the transaction price to the separate performance obligations in the contract.

As determined in previous steps, the total transaction price is $56,160 and it should be allocated across the 216 performance obligation hours.

price per hour:

IFRS Step 5. Recognize revenue when (or as) the business satisfies each performance obligation.

northern can recognize revenue of each time it provides University with of consulting services in 20X2.

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