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    Ifrs 15 Questions

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    Tata Mgp
    Merlton Ltd sold a vehicle to a customer on November 14, 2017 for Tsh30,000 with a delivery date of January 3, 2018. The customer paid a 20% non-refundable deposit on November 14, 2017 and paid the balance of Tsh24,000 on January 10, 2018 when the vehicle was delivered. Carltown Ltd entered into a contract on December 1, 2017 to supply, install, and service computers for Tsh200,000, including a two-year service contract. Payment was made in full in January 2018 after installation. Shipton Ltd provided estate management services completed on September 30, 2017 for Tsh50,000, with Tsh10,000 paid on completion and the

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    Ifrs 15 Questions

    Uploaded by

    Tata Mgp
    43 views2 pages
    Merlton Ltd sold a vehicle to a customer on November 14, 2017 for Tsh30,000 with a delivery date of January 3, 2018. The customer paid a 20% non-refundable deposit on November 14, 2017 and paid the balance of Tsh24,000 on January 10, 2018 when the vehicle was delivered. Carltown Ltd entered into a contract on December 1, 2017 to supply, install, and service computers for Tsh200,000, including a two-year service contract. Payment was made in full in January 2018 after installation. Shipton Ltd provided estate management services completed on September 30, 2017 for Tsh50,000, with Tsh10,000 paid on completion and the

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    Merlton Ltd sold a vehicle to a customer on November 14, 2017 for Tsh30,000 with a delivery date of January 3, 2018. The customer paid a 20% non-refundable deposit on November 14, 2017 and paid the balance of Tsh24,000 on January 10, 2018 when the vehicle was delivered. Carltown Ltd entered into a contract on December 1, 2017 to supply, install, and service computers for Tsh200,000, including a two-year service contract. Payment was made in full in January 2018 after installation. Shipton Ltd provided estate management services completed on September 30, 2017 for Tsh50,000, with Tsh10,000 paid on completion and the

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    43 views2 pages

    Ifrs 15 Questions

    Uploaded by

    Tata Mgp
    Merlton Ltd sold a vehicle to a customer on November 14, 2017 for Tsh30,000 with a delivery date of January 3, 2018. The customer paid a 20% non-refundable deposit on November 14, 2017 and paid the balance of Tsh24,000 on January 10, 2018 when the vehicle was delivered. Carltown Ltd entered into a contract on December 1, 2017 to supply, install, and service computers for Tsh200,000, including a two-year service contract. Payment was made in full in January 2018 after installation. Shipton Ltd provided estate management services completed on September 30, 2017 for Tsh50,000, with Tsh10,000 paid on completion and the

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    IFRS 15 QUESTIONS

    QUESTION ONE

    Merlton Ltd, a motor dealer, sold a vehicle to a customer on 14 November 2017. The contract
    showed an agreed price of Tsh 30,000 and a delivery date of 3 January 2018. The customer paid a
    20% non-refundable deposit on 14 November 2017. The vehicle was delivered on 10 January 2018
    and the balance due of Tsh24,000 was paid by the customer on that date.

    Required: Advise, showing relevant journal entries, how the above transaction should be
    recognized in Merlton’s financial statements for the year ended 31 December 2017 and 2018?

    QUESTION TWO

    Carltown Ltd, a technology equipment supply company, entered into a contract with a customer
    on 1 December 2017 to supply, install and service a system of computers. The agreed price was
    Tsh200,000, to include a two-year service contract. Payment was made in total following
    installation in January 2018.

    At 31 December 2017, Carltown had supplied all the machines, but had not yet installed any.
    Installation happened in January 2018. The directors of Carltown estimated that the computers
    would be sold for Tsh150,000 on a stand-alone basis. Installation would cost Tsh20,000, and the
    two-year service contract would cost Tsh50,000 if purchased separately.

    Required: Advise, showing relevant journal entries, how the above transaction should be
    recognized in Carltown’s financial statements for years ended 31 December 2017 and 2018?

    QUESTION THREE

    Shipton Ltd, a professional services company, provided estate management services for a
    customer, completed on 30 September 2017. The agreed price was Tsh50,000. The customer paid
    Tsh10,000 on completion on 30 September 2017. It was agreed that the customer would pay the
    remainder 12 months later, on 30 September 2018. Shipton’s cost of capital is 7%.
    Required: Advise, showing relevant journal entries, how the above transaction should be
    recognized in Shipton’s financial statements for the year ended 31 December 2017 and 2018?

    QUESTION FOUR

    S Limited enters into a contract with a customer to see its product for Tsh200 per unit for the year
    01.01.17 – 31.12.17. If the customer purchases more than 1,200 units in the year, the price will
    decrease to Tsh150 per unit. S Limited does not believe at the date of the contract be initiated that
    the customer will purchase more than 1,200 from it due to past trading patterns with this customer.

    On 01.10.17, S Limited believes that the customer will meet the target based on its sales of 1,100
    units by that date to the customer as the customer purchased 500 units on that date and informed
    management of S Limited that it would be placing a further order of 200 units on 1 December
    2017. 600 units were sold to the customer by the 30.06.17. How should S Limited account for its
    sales to the customer in the period from 01.01.17 – 30.06.17 and in the period 01.07.17 – 31.12.17?

    QUESTION FIVE

    Suppose that a contract is started on January 1, 2017, with an estimated completion date of
    December 31, 2018. The final contract price is Tsh1,500,000.
     In the first year, to December 31, 2017:
    a) Costs incurred amounted to Tsh600,000
    b) Half of the work on the contract was completed
    c) Certificate of work completed have been issued, to the value of Tsh750,000
    d) It is estimated with reasonable certainty that further costs to completion in 2018 will be Tsh
    600,000
    What is the contract profit in 2017, and what entries would be made for the contract at
    December 31, 2017?

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