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Assignment 2 Revenue Updated

Cellular Ltd is a telecommunications company that offers Android contracts and cellular network services. It signed a contract with Ask (Pty) Ltd for 500 Android phones with sim cards on a once contract. The financial manager needs help applying IFRS 15 to properly recognize revenue from the contracts. The summary should discuss the key steps to recognize revenue according to IFRS 15 for the contracts.

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shirleygebenga020829
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30 views2 pages

Assignment 2 Revenue Updated

Cellular Ltd is a telecommunications company that offers Android contracts and cellular network services. It signed a contract with Ask (Pty) Ltd for 500 Android phones with sim cards on a once contract. The financial manager needs help applying IFRS 15 to properly recognize revenue from the contracts. The summary should discuss the key steps to recognize revenue according to IFRS 15 for the contracts.

Uploaded by

shirleygebenga020829
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ACCOUNTING 2A

Assignment 2

2ACCOUNTING 2A – ASSIGNMENT 2
REVENUE ASSIGNMENT 30
MARKS

Cellular Ltd is a telecommunications company that specialises in Android contracts. For the
past 7 years Cellular Ltd has been performing well and has experienced exponential growth.
In addition to offering Android contracts, Cellular Ltd’s secondary product line is the offering
of services on their cellular network. Such services include data, minutes and SMS’s. The
company have 31 December year end.

The contracts that Cellular Ltd offers are:

● Once contracts – Contracts that only have a one-year duration (12 months)

● Twice contracts – Contracts that have a two-year duration (24 months)

● Thrice Contracts – Contracts that have a three-year duration (36 months)

Ask (Pty) Ltd is an auditing advisory firm which has been growing consistently over the past
6 years and expects to maintain their growth for the foreseeable future.

On 1 October 2022, Ask (Pty) Ltd signed a contract in writing with Cellular Ltd for 500
Android phones with one sim card for each phone (sim cards are to run on Celluar networks)
on a Once contract. The sim cards can be sold without the phone. The Phones were
delivered to Ask (Pty) Ltd on 1 November 2022.

Each contract consists of:

● 1 Android phone

● 10 GB data per month

● 200 Minutes per month

Each contract will result in a monthly cost of R1 200.

One Android phone can be purchased at a cash price of R10 000 each at Cellular Ltd.

The financial manager of Cellular Ltd is not familiar with the IFRS 15 Revenue from
Contracts with Customers standard and has asked you, a technical expert, for assistance.

REQUIRED

Advise Cellular Ltd on the correct method of recognising revenue from the 300 Once
Contracts in accordance with the requirements of IFRS 15 Revenue from Contracts with
Customers. You are required to discuss only discuss step 1 – 4.
ACCOUNTING 2A
Assignment 2

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