Page 439 - F2 Integrated Workbook STUDENT 2019
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Example 7.1 continued
The remaining 26 months of revenue will be recorded as deferred income within
the SOFP.
Journals
On despatch 1 Mar 20X1
Dr Cash 750,000
Cr Revenue 675,000
Cr Deferred income 75,000
Over 10m period of service provided in 20X1
Dr Deferred income 20,833
Cr Revenue 20,833
Example 7.2
Gross Net has little experience
Gross Net must estimate the variable consideration it expects to receive. This
might be nil or $0.2 million. However, the estimate cannot be included in the
transaction price because its receipt is not highly probable. Therefore the
transaction price is $1 million. Revenue recognised in the current year will be
$0.5 million ($1m × ½).
Gross Net has extensive experience
The estimated variable consideration that will be received is $0.2 million. This
can be included in the transaction price because its receipt is highly probable.
The transaction price is therefore $1.2 million. Revenue recognised in the
current year will be $0.6 million ($1.2m × ½).
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