Reference no: EM132884600

Question - On 1 March 2020, CelikKomputer Bhd (CKB) sold personal computers that include warranty on any defect of its computers for six months. In addition, it sells separately an extended warranty, that provides protections from defects for two years beyond the six months.

CKB has a contract with MYL to sell computers parts, provide training and operate an IT helpdesk on 1 April 2020. Each of these has been assessed to be separate performance obligations. The total transactions price has been determined to be RM1,440,000. CKB determined the standalone selling prices for the computer parts, training and IT helpdesk are RM720,000, RM180,000 and RM900,000 respectively.

CKB has signed an agreement to RM215,000 to sell laptops to Maju Bhd on 4 May 2020. The cost of the laptops was RM182,000. Maju is planning to provide the new laptops to the needy students in rural areas for online classes during the covid-19 pandemic. Maju Bhd requested CKB to retain the laptops in its warehouse as Maju Bhd has no space to keep the laptops. Maju Bhd requested to retain the goods until Maju Bhd is already rented an office for charity purposes by 8 June 2020. However, the title was passed to Maju Bhd at the time the agreement was signed. Maju Bhd made full payment on 20 May 2020. Maju Bhd will scheduled a program with the MP of the district to donate to the students

a) Identify the performance obligation of the revenue arrangement on 1 July 2020.

b) Allocate the transaction price to each performance obligation of the contract to MYL.