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Coulomb Ltd is an electric vehicle manufacturer who also owns a network of electric vehicle charging stations across Australia. Coulomb sells its electric sedan, the I-VR, for $66,000 paid upfront in a package deal contract that includes five years of unlimited access to the vehicle charging station network. The standalone costs are $66,000 for the sedan and $6,000 for the charging station network access if each is purchased separately. Access to the charging station network can be purchased separately by existing owners of electric vehicles.Applying AASB 15 Revenue from Contracts with Customers, which of the following would be least appropriate when recognising revenue on this contract?Group of answer choicesDetermine the transaction price as $66,000.Recognise revenue from the charging station network access over time as the benefits are provided.Identify the sedan and the charging station network access as two distinct performance obligations.Recognise a liability for the discount provided to customers based on the difference between the standalone prices and the transaction price.

Question

Coulomb Ltd is an electric vehicle manufacturer who also owns a network of electric vehicle charging stations across Australia. Coulomb sells its electric sedan, the I-VR, for 66,000paidupfrontinapackagedealcontractthatincludesfiveyearsofunlimitedaccesstothevehiclechargingstationnetwork.Thestandalonecostsare66,000 paid upfront in a package deal contract that includes five years of unlimited access to the vehicle charging station network. The standalone costs are 66,000 for the sedan and 6,000forthechargingstationnetworkaccessifeachispurchasedseparately.Accesstothechargingstationnetworkcanbepurchasedseparatelybyexistingownersofelectricvehicles.ApplyingAASB15RevenuefromContractswithCustomers,whichofthefollowingwouldbeleastappropriatewhenrecognisingrevenueonthiscontract?GroupofanswerchoicesDeterminethetransactionpriceas6,000 for the charging station network access if each is purchased separately. Access to the charging station network can be purchased separately by existing owners of electric vehicles.Applying AASB 15 Revenue from Contracts with Customers, which of the following would be least appropriate when recognising revenue on this contract?Group of answer choicesDetermine the transaction price as 66,000.Recognise revenue from the charging station network access over time as the benefits are provided.Identify the sedan and the charging station network access as two distinct performance obligations.Recognise a liability for the discount provided to customers based on the difference between the standalone prices and the transaction price.

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Solution

The least appropriate action when recognising revenue on this contract, according to AASB 15 Revenue from Contracts with Customers, would be to determine the transaction price as 66,000.Thisisbecausethetransactionpriceshouldreflectthetotalconsiderationtowhichtheentityexpectstobeentitledinexchangeforthepromisedgoodsorservices.Inthiscase,thepackagedealincludesboththesedanandfiveyearsofunlimitedaccesstothevehiclechargingstationnetwork.Ifpurchasedseparately,thesewouldcost66,000. This is because the transaction price should reflect the total consideration to which the entity expects to be entitled in exchange for the promised goods or services. In this case, the package deal includes both the sedan and five years of unlimited access to the vehicle charging station network. If purchased separately, these would cost 72,000 (66,000forthesedanand66,000 for the sedan and 6,000 for the charging station network access). Therefore, setting the transaction price at $66,000 would not accurately represent the total value of the goods and services provided.

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