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Question - Company A provides a bundled service offering to Customer B. It charges Customer B $90,000 for the initial connection to its network and two ongoing services - access to the network for 1 year and 'on-call troubleshooting' advice for two years.
Customer B pays the $90,000 upfront, on 1 July 2019. Company A determines that, if it were to charge a separate fee for each service if sold separately, the fee would be:
Connection fee $20,000
Access fee $40,000
Troubleshooting $60,000
The end of Company A's reporting period is 30 June 2020.
Required - Prepare the journal entries to record this transaction in accordance with AASB 15 "Revenue from Contracts with Customers" for the 1 July 2019 and for the year ended 30 June 2020, assuming Company A applies the relative fair value approach. (Show all workings).
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