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Prepare the journal entries to record this transaction

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Question - Theresa Ltd provides a bundled service offering to Donald Ltd. It charges Donald Ltd $35,000 for initial connection to its network and two ongoing services - access to the network for 1 year and 'oncall trouble-shooting' advice for that year. Donald Ltd pays the $35,000 upfront, on 1 July 2018. Theresa Ltd determines that, if it were to charge a separate fee for each service if sold separately, the fee would be:

Connection fee $5,000

Access fee $12,000

Troubleshooting $23,000

The end of Theresa Ltd reporting period is 30 June.

You are required to prepare the journal entries to record this transaction in accordance with IFRS 15 for the year ended 30 June 2019, assuming Theresa Ltd applies the relative fair value approach. Show all workings.

Reference no: EM133021078

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