+1 862 207 3288 IFRS 15 Revenue Recognition
Company A earns revenue from haircuts and sales of their own line of beauty products. They also sell gift cards for both haircuts and beauty products.
The company year-end is December 31, 2015
A customer will typically go to the salon and pay for the haircut he wants.
Beauty products are sold with the guarantee that if the customer is not completely satisfied, the product can be returned within 30 days for a full refund.
In 2015, the company sold beauty products initially developed in 2012, and several new beauty products sold for the first time in 2015.
In 2015 the company made $110,000 of revenue from:
– Haircut services = $50,000
– Beauty products developed in 2012 = $50,000
– Beauty products developed in 2015 = $5,000
– Gift cards = $5,000
Of the $50,000 sales of products developed in 2012, $20,000 retail value of goods was shipped to independent distributors. The company told the distributors that they need not pay till they sold the goods, which they could return for a full refund in November if they so wished.
50% of the dollar value of gift cards sales for the year was for haircut services and 50% was for products developed in 2012. 80% of the haircut gift cards and 60% of the product gift cards sold have been used in 2015. (Assume there were no outstanding gift certificates from previous years.)
Given the following information provide an assessment of how revenue will be recognized under IFRS 15 for:
– Haircut services
– Sales of products made in 2012
– Sales of products made in 2015
– Gift cards
