ACCA Strategic Professional · Strategic Business Reporting (International) · Revenue
Zenith plc sells a machine and a one-year maintenance contract to a customer for a total of $120,000. The standalone selling price of the machine is $100,000 and of the maintenance is $50,000. Both are distinct performance obligations. Under IFRS 15, what amount is allocated to the machine?
$80,000 is allocated to the machine. IFRS 15 allocates the transaction price in proportion to relative standalone selling prices, so the machine receives 100/150 of the $120,000 price, and the bundle discount is shared proportionately between machine and maintenance.
- A$100,000
- B$80,000Correct
- C$60,000
- D$120,000
Explanation
Total standalone selling prices are $150,000. The machine's share is 100/150 x $120,000 = $80,000. Allocating $100,000 would ignore the bundle discount, which must be spread proportionately across both obligations.
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