Question 1

Section A

AstroData Co provides space exploration data analytics. On 1 October 20X5, AstroData entered into a contract to provide a client with a specialized data dashboard and 12 months of continuous satellite data updates for a total fixed fee of $150,000. The dashboard and the updates are distinct performance obligations. The standalone selling price of the dashboard is $60,000 and the updates are $120,000. The dashboard was delivered on 1 October 20X5.

What amount of revenue should AstroData Co recognize for the year ended 31 December 20X5? (Calculate to the nearest whole dollar)

Accepted Answer

1. Calculate total standalone selling prices. 2. Allocate the $150,000 transaction price based on relative standalone prices. 3. Recognize dashboard revenue at a point in time (1 Oct). 4. Recognize update revenue over time (3 months out of 12).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Forgetting to allocate the discount across both performance obligations.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FR — Financial Reporting Practice Exam 6

More questions from this exam