ExpertMedium2 marksMultiple Choice
ACCA · Question 02 · Financial Reporting
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)
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)
Answer options:
A.
$50,000
B.
$75,000
C.
$60,000
D.
$87,500
How to approach this question
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).
Full Answer
B.$75,000✓ Correct
Total standalone selling price = $60,000 + $120,000 = $180,000.
Dashboard allocation = ($60,000 / $180,000) × $150,000 = $50,000.
Updates allocation = ($120,000 / $180,000) × $150,000 = $100,000.
Revenue for year ended 31 Dec 20X5 = $50,000 (dashboard) + ($100,000 × 3/12 months) = $75,000.
Common mistakes
Forgetting to allocate the discount across both performance obligations.
Practice the full ACCA FR — Financial Reporting Practice Exam 6
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