QUESTION 3 (30 Infor Tech (Pty) Limited (Infor Tech) is a company in the WIFI industry. One of MTC Namibias biggest competitors to date. The company offers a complete Wi-Fi package to the public, including the supply of a Wi-Fi modem and the Wi-Fi antenna. The installation of the antenna and Modem as well as a monthly subscription to Wi-Fi packages is structured as follows: Monthly subscription to Wi-Fi is as below: The buyer is required to enter into a 24-month contract with Infor Tech for the monthly subscription. As an incentive to buy the package, the first 2 months subscription of the contract is offered free, after which a subscription of N$457 per month is charged a month in arrears up to the end of the contract. The contract also specifies the price for the Wi-Fi antenna, modem and the installation fee. The Modem is paid back by the buyer interest free in 24 equal monthly instalments, payable in arrears. The antenna and installation fee are however payable within 30 days, with a 5% settlement discount if the debtor pays on time. All the prices above are inclusive of 15% VAT. Infor Tech also has a number of registered technicians that are able to repair modems free if they break. This is a separate service offered by Infor Tech as and when it is required by the user and does not form part of the package. Assume an interest rate of 10% for the year. Ignore INCOME TAX Contract item Prices Amount Supply of the Antenna 920.00 Supply of the Wi-Fi Modem 3 450.00 Installation 230.00 Cost of supplying the service: Antennas 172.50 Modems at cost 1 725.00 : (a) Discuss the correct recognition and measurement of one Wi-Fi package in the 25 accounting records of Infor Tech (Pty) Ltd. Your answer should address the below: Initial recognition Identified performance obligations Determination of the transaction Price Allocation of transaction price to each performance obligation Recognition of revenue at satisfaction of the identified performance obligations (b) Prepare Journal entries of one typical Wi-Fi package in the books of Infor Tech (Pty) Ltd.