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Section B - Case 1
*AeroStream is a commercial airline. On 1 January 20X5, AeroStream entered into a contract with a corporate client to provide 10 specific charter flights during the year for a total fixed price of $50,000. As part of the contract, AeroStream also granted the client 50,000 loyalty points, which can be redeemed for future flights. The standalone selling price of one charter flight is $5,500. The standalone selling price of one loyalty point is estimated at $0.10.
Also on 1 January 20X5, AeroStream leased a new aircraft for 5 years. The lease requires annual payments of $200,000 in arrears. The implicit interest rate in the lease is 5%. The present value of the lease payments is $865,895. AeroStream incurred initial direct costs of $15,000 to negotiate the lease.*
Question:
Under IFRS 15, what percentage of the total transaction price ($50,000) should be allocated to the loyalty points?
ACCA · Question 17 · IFRS 15 Revenue from Contracts with Customers
Section B - Case 1
*AeroStream is a commercial airline. On 1 January 20X5, AeroStream entered into a contract with a corporate client to provide 10 specific charter flights during the year for a total fixed price of $50,000. As part of the contract, AeroStream also granted the client 50,000 loyalty points, which can be redeemed for future flights. The standalone selling price of one charter flight is $5,500. The standalone selling price of one loyalty point is estimated at $0.10.
Also on 1 January 20X5, AeroStream leased a new aircraft for 5 years. The lease requires annual payments of $200,000 in arrears. The implicit interest rate in the lease is 5%. The present value of the lease payments is $865,895. AeroStream incurred initial direct costs of $15,000 to negotiate the lease.*
Question:
By 30 June 20X5, AeroStream has provided 4 of the 10 charter flights. None of the loyalty points have been redeemed. How much revenue should AeroStream recognize in respect of this contract for the half-year ended 30 June 20X5?
Section B - Case 1
*AeroStream is a commercial airline. On 1 January 20X5, AeroStream entered into a contract with a corporate client to provide 10 specific charter flights during the year for a total fixed price of $50,000. As part of the contract, AeroStream also granted the client 50,000 loyalty points, which can be redeemed for future flights. The standalone selling price of one charter flight is $5,500. The standalone selling price of one loyalty point is estimated at $0.10.
Also on 1 January 20X5, AeroStream leased a new aircraft for 5 years. The lease requires annual payments of $200,000 in arrears. The implicit interest rate in the lease is 5%. The present value of the lease payments is $865,895. AeroStream incurred initial direct costs of $15,000 to negotiate the lease.*
Question:
By 30 June 20X5, AeroStream has provided 4 of the 10 charter flights. None of the loyalty points have been redeemed. How much revenue should AeroStream recognize in respect of this contract for the half-year ended 30 June 20X5?
Answer options:
$20,000
$22,000
$18,333
$16,667
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