Reference no: EM132850788

Question - On 1 May 2021 Jaune Limited signed a contract with Rouge Limited for the supply of a van, free service and 12 months of car washing. The terms of the sale are:

-Sale price of van: $155,000.

-Weekly car washing for 12 months (i.e. 52 weeks), commencing after the first vehicle service: $5,000.

-Free vehicle service once it has travelled 10,000 kilometres.Rouge took ownership of the van on 1 June 2021, paying the $160,000 contract price. On 15 July 2021, Jaune performed the first vehicle service, with the weekly car washing commencing on that date.

If the van was sold without the free service, the selling price would be $145,000. Typically for Jaune, the vehicle service would be charged to the customer at $10,000 under its fixed price servicing plan. A single car wash retails for $120 each.

Which of the following statements correctly recognises the revenue from this contract in accordance with IFRS 15 Revenue from Contracts with Customers for the year ended 30 June 2021?

A. Revenue of $139,388 and a contract liability of $15,612.

B. Revenue of $143,885 and a contract liability of $16,115.

C. Revenue of $155,000 and trade receivable of $5,000.

D. Revenue of $145,000 and a contract liability of $15,000.