Telecommunications company, Sydney Ltd, signed a 15-year deal to sell capacity on its cable net- work to a rival company for $200 million. The deal was completed on the last day of Sydney Ltds financial year, 30 June. The company received an upfront payment of only $20 million from its competitor on that day, but decided to recognise revenue of $200 million for the financial year just completed.

Required (a) Discuss fully how Sydney Ltd should account for the contract justifying your answer by reference to relevant definitions and recognition criteria and relevant accounting standards. (You need to support your argument using AASB, Corporation Act 2001 )