Question 1

**Section A**

CloudSync, a tech startup, signs a contract to provide a customer with a customized SaaS platform. The contract requires a non-refundable upfront fee of $120,000 for initial setup (which does not transfer a distinct good or service to the customer) and a monthly subscription fee of $10,000 for 24 months. How much revenue should CloudSync recognize in the first month of the contract under IFRS 15?

Accepted Answer

Determine the total transaction price and the number of distinct performance obligations. If the setup is not distinct, combine the fees and recognize them over the service period.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Recognizing the non-refundable upfront fee immediately upon receipt is a very common error.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FR — Financial Reporting Practice Exam 2

More questions from this exam