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Determine the allocation of the transaction prices

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Question - Hub Pte Ltd provides voice and data services as well as sells handphones. On 1 January 20X1, Hub enters into sales contracts with two different customers: Customer X and Customer Y. Both customers choose the same handphone and the same monthly service plan. The standalone selling price for the handphone is $480 (cost of the handphone is $350) and the standalone selling price of the service plan is $60 per month. Customer X purchases the handphone for $480 and enters into a cancellable contract to receive the voice and data services for $60 per month. Customer Y enters into a 24-month service contract for $60 per month and pays $200 for the handphone.

Determine the allocation of the transaction prices for both customers and the revenue to be recognised for the month of January and February. Explain your answers using the appropriate FRS(s).

To activate the voice and data services, Hub Pte Ltd charges the customers an upfront, non-refundable fee of $12. How should this activation fee be treated under the applicable FRS(s)?

Reference no: EM132963119

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