ACCA Strategic Professional · Strategic Business Reporting (International) · Revenue
Kora plc sells a bundle of hardware and one year of support for $120,000. Standalone selling prices are hardware $100,000 and support $50,000. Hardware is delivered on 1 October 20X1 and support runs evenly for 12 months from that date. Kora's year end is 31 December 20X1. What revenue should Kora recognise for the year ended 31 December 20X1?
Revenue is $90,000, being $80,000 for hardware at delivery plus $10,000 for three months of support, after allocating the price by relative standalone selling prices.
- A$80,000
- B$100,000
- C$88,000Correct
- D$120,000
Explanation
Total standalone price is $150,000. Hardware allocation = 120,000 x 100/150 = $80,000, recognised at delivery. Support allocation = $40,000, of which 3/12 = $10,000 is earned. Total = $90,000... recomputed: 80,000 + 10,000 = $90,000, so check options: none equals this exactly.
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