How to recognise the revenue from the transaction

Reference no: EM132756159

Question: Susan Ltd sells headphones to Leo Ltd. The agreement between the two parties states that purchase of more than 100 headphones are entitled to a discount of 8% on their purchases. On 1 April 2020, Leo Ltd ordered 120 headphones from Susan Ltd. The normal selling price per headphone is $200. Susan Ltd delivered the 150 headphones on 1 April 2020. Leo Ltd paid for the goods on 20 May 2020. The financial year end of Susan Ltd is 30 June.

Required: According to AASB 15 Revenue, explain when and how to recognise the revenue from this transaction by Susan Ltd for the year ended 30 June 2020 and prepare journal entries for related transactions for Susan Ltd.

b) Lippman Ltd sells carpet cleaners to a retailer on a consignment basis . The retailer does not have an obligation to pay Lippman Ltd until a sale occurs and any unsold products may be returned to Lippman Ltd. On 8 January 2020, Lippman Ltd sells 100 carpet cleaners valued at $50 000 ($500 per cleaner) and delivered on 10 January 2020 to the retailer. On 15 January 2020, the retailer sells 10 carpet cleaners to a customer at a price of $560 per machine.

Required: According to AASB 15 Revenue, explain when to recognise the revenue from this transaction by Lippman Ltd and provide the reason.

Reference no: EM132756159

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