Question 1

**Section A**

Oceanic Logistics provides shipping services. They issue an invoice for $10,000 to a client. Oceanic offers a 5% trade discount to this client, and an additional 2% early settlement discount if payment is made within 10 days. Oceanic expects the client to take the early settlement discount.

At what amount should Oceanic Logistics initially record the revenue?

Accepted Answer

First, deduct the trade discount. Then, because the settlement discount is expected to be taken, deduct it from the post-trade discount balance to find the initial revenue figure under IFRS 15.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating the settlement discount on the gross $10,000 instead of the $9,500 subtotal.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 1

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