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Ernst Ltd provides a bundled telecommunications service contract to Arthur Ltd. It charges Arthur Ltd $35...

Ernst Ltd provides a bundled telecommunications service contract to Arthur Ltd. It charges Arthur Ltd $35 000 for the initial connection to its network and two ongoing services – access to the network for one year and ‘on-call troubleshooting’ advice for that year. Arthur Ltd pays the $35 000 on 1 July 2019. Ernst Ltd determines that, if it were to charge a separate fee for each service if sold separately, the fee would be:

Connection fee

$10,000

Access fee

$17,000

Troubleshooting

$31,000

The end of Ernst Ltd’s reporting period is 30 June each year.

Required:

  1. Prepare the general journal entries to record this transaction in accordance with AASB 118 for the year ended 30 June 2020. Show all workings.

What do you understand by the Measurement of Revenue under AASB118

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ekkarill92 answered 1 year ago
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