Reference no: EM132765841

Alberto is a company that manufactures and sells mobile phones and mobile phone contracts. It prepares its financial statements under International Financial Reporting Standards and has a year end of 30th April 2018.

Alberto launched a promotion during the year to attract new customers to its network. Under this promotion, customers sign a non-cancellable contract to subscribe to the Alberto network for twelve months. The cost is $30 per month, payable at the end of each month. This price includes a new handset and network access.

The normal retail price of these elements is as follows:

$

Handset                                  250
Network access (per month)           15

In total, 100,000 new customers signed up for this promotion. The contracts all began on 1st March 2018.

REQUIRED:

Problem 1: Discuss how the above events should be accounted for in the financial statements of Alberto for the year ended 30th April 2018.