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Calculate the revenues allocated to each of the services

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Reference no: EM132747888

Question: Andrews Ltd provides a bundled service offering to Sutton Ltd. It charges Sutton Ltd $60,000 for:

• Initial connection to its networks;

• Access to the network for 1 year, and;

• on- call troubleshooting advice for the year

Sutton Ltd pays the $60,000 upfront, on 1 July 2020. Andrews Ltd determines that, if it were to charge a separate fee for each service if it sold separately, the fees would be:

Connection fee: 25,000

Access fee: 15,000

Troubleshooting: 27,000

The end of the reporting period for Andrews Ltd is 30 June:

Required: 1) Calculate the revenues allocated to each of the services being sold

2) Prepare the journal entries to record the transaction in accordance with AASB 15 on 1 July 2020

3) Prepare journal entries on 31 July 2020 to recognise revenue, assuming Andrews Limited determines satisfaction of performance obligations monthly.

Reference no: EM132747888

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