Prepare the journal entries to record transaction for year

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Reference no: EM132553949

Luka Ltd provides a bundled service offering to Eden Ltd. It charges Eden Ltd $40 000 for an initial connection to its network and two ongoing services - access to the network and 'on-call troubleshooting' advice for 2 years.

Eden Ltd pays the $40 000 upfront, on 1 July 2020. Luka Ltd determines that, if it were to charge a separate fee for each service if sold separately, the fee would be:

Connection fee          $ 6 000

Access fee                  14 000

Troubleshooting               25 000

The end of Luka Ltd's reporting period is 30 June.

Required:

Question 1: Prepare the journal entries to record this transaction in accordance with AASB 15/IFRS 15 for the year ended 30 June 2021 and 30 June 2022, assuming Luka Ltd applies the relative fair value approach. Show all workings. Round up your answers to the nearest dollar. Narration is not required.

Reference no: EM132553949

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