Question 1

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?

Accepted Answer

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.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Spreading the integration fee over the two-year period, failing to recognize it as a distinct performance obligation.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FR — Financial Reporting Practice Exam 1

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