ExpertMedium2 marksMultiple Choice
ACCA · Question 02 · Revenue from Contracts with Customers
SECTION A
CloudStream Co, a software-as-a-service (SaaS) provider, enters into a contract with a customer on 1 January 20X5 to provide access to its cloud platform for two years. The total contract price is $120,000, payable upfront. CloudStream also provides a distinct customized integration service for an additional $30,000, completed on 31 March 20X5.
How much revenue should CloudStream recognize in its statement of profit or loss for the year ended 31 December 20X5 in accordance with IFRS 15 Revenue from Contracts with Customers?
SECTION A
CloudStream Co, a software-as-a-service (SaaS) provider, enters into a contract with a customer on 1 January 20X5 to provide access to its cloud platform for two years. The total contract price is $120,000, payable upfront. CloudStream also provides a distinct customized integration service for an additional $30,000, completed on 31 March 20X5.
How much revenue should CloudStream recognize in its statement of profit or loss for the year ended 31 December 20X5 in accordance with IFRS 15 Revenue from Contracts with Customers?
Answer options:
A.
$60,000
B.
$90,000
C.
$150,000
D.
$75,000
How to approach this question
Identify the performance obligations. The platform access is satisfied over time (2 years). The integration service is distinct and satisfied at a point in time (31 March 20X5). Calculate the revenue for each for the year ended 31 Dec 20X5.
Full Answer
B.$90,000✓ Correct
Under IFRS 15, revenue is recognized when (or as) performance obligations are satisfied. The SaaS access is satisfied over time ($120,000 / 24 months * 12 months = $60,000). The integration is a distinct service completed on 31 March 20X5, so its full $30,000 is recognized in 20X5. Total = $90,000.
Common mistakes
Spreading the integration fee over the two-year period, failing to recognize it as a distinct performance obligation.
Practice the full ACCA FR — Financial Reporting Practice Exam 1
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