Part I

Heavy Duty Gym Equipment Pty Ltd sells gym equipment and personal trainer lessons. On 1 June 2020, Heavy Duty Gym Equipment Pty Ltd signs an agreement with Burwood Fitness Club to provide 2 personal training sessions for 10 weeks and 5 items of gym equipment. The contract price amounted to $44,000 (GST inclusive), on credit terms n/30 for the equipment and the personal training lessons. This amount also includes one free service for the equipment to be performed twelve months after the delivery of equipment to Burwood Fitness Club.

The stand-alone price for the 20 personal training sessions is $2,200 (GST inclusive). The personal training sessions lessons will start on 8 June 2020.

The stand-alone price of the equipment is $55,000 (GST inclusive). The twelve-month service fee for the equipment is usually $880 (GST inclusive).

Burwood Fitness Club paid the full amount on 20 June 2020 for the equipment and personal training lessons. The equipment was delivered on 28 June 2020. By 30 June 2020, 7 personal training lessons had been held.

1. How should Heavy Duty Gym Equipment Pty Ltd allocate the transaction price to the distinct performance obligations in this contract based on IFRS 15/AASB 15 Revenue with Contracts from Customers?
2. As the accountant at Heavy Duty Gym Equipment, the owners have asked you to record the revenue from the contract at a point in time rather than over time. Discuss the owners request and if you agree with them. How much revenue will you record in the statement of Financial Performance as at 30 June 2020? Reference IFRS 15/ AASB 15 Revenue from Contracts with Customers in your response.