Step 1: Identify

Methods the Contract SASP

of Estimating
= contract between Globe and Rain

Step Adjusted Market

2: Determine the Assessment
separate performance Approach
obligation
- We will consider the price of the competitor
Performance Obligation 1: Handset
Performance Obligation 2: Network Service
 Costs plus a margin approach
- Costs + Markup
Step 3: Determine the Transaction Price Transaction Price
Monthly
Residual Approach
Payment (2499*24months) 59,976
Cash Out
- Kung magkano yung nattitira, yun yung amount47,800 na ia-allocate mo
Transaction Price 106,776
- Pwede lang siya gamitin if ang relative FV at SASP is highly uncertain.
Step 4: Allocate the TP to separate performance obligation Transaction Price RVF/SASP Allocation
ILLUSTRATIVE PROBLEM
Performance Obligation 1: Handset 106,776 82,990 74,743
Performance Obligation 2: Network Service 106,776 35,568 32,033
118,558 106,776
IvanaSupporting
Company enters into a contract to build (including maintenance) and operates high rise
Computations:
condominiums
1,482*24 monthsfor a period of 25 years, commencing upon 35,568 completion of the construction of the sala
106,776*82,990 / 118,558 74,743
condominiums. The fixed fee to build and operate the building32,033
106,776*35,568 / 118,558
Is 100,000,000. there is probable evidence
that the selling price and maintenance is P 30,000,000 and P 21,000,000 respectively but none for the
Step 5: Recognize revenue when each PO is satisfied
operating the condominium. It is determined that the transaction price must be allocated to the three
Handset (at a point in time; recognized immediately) 74,743 74,743
performance obligations
Network Service (construction
(over the period of the building,
of time; 32,033/24months maintenance,
1,335 per month*10 and operating
13,350 the condominium).
Total Revenue 88,093
Required:
RevenueAllocate
is 13,350 the transaction price of P100,000,000 to the three performance obligations assuming:

1. The stand-alone selling price of operating the condominium with reference to the price of the
competitors is P 31,000,000.

2. Ivana estimates the total cost that will be incurred to operate the condominium is P 29,500,000. Normal
gross profit of Ivana is 20%.

3. The stand-alone selling price for operating the condominium is highly variable or uncertain because
Ivana hasn't previously sold the service and hasn't yet determined a price for it.

1.) Adjusted market Assessment Approach

Performance Obligation Transaction price SASP Allocation
Construction 100,000,000 30,000,000 36,585,366
Maintenance 100,000,000 21,000,000 25,609,756
Operation 100,000,000 31,000,000 37,804,878
82,000,000 100,000,000

2.) Cost plus a margin approach

Performance Obligation Transaction price SASP Allocation
Construction 100,000,000 30,000,000 34,722,222
Maintenance 100,000,000 21,000,000 24,305,556
Operation 100,000,000 35,400,000 40,972,222
86,400,000 100,000,000
SASP of Operation = 25.5M* 120% = 35.4M

3.) Residual Approach

Performance Obligation Allocation
Construction 30,000,000
Maintenance 21,000,000
Operation 49,000,000 (100M-39M-21M)
100,000,000
 Step 5: Recognize revenue when each performance obligation is satisfied

Ways on satisfying a performance obligation

1. Satisfaction over the period of time

- Kapag after the deliver of goods or services, the seller is still obligated to update the buyer
and provide continuing services.
- The allocated revenue or transaction price will be recognized all throughout the period.
2. Satisfaction at a point in time
- Kapag after the delivery of goods or services, the seller will no longer have an obligation.
- The allocated revenue or transaction price will be recognized at a point in time.

Example:

Globe Telecom, Inc. a telecommunication operator entered into a contract with Rain on March 1, 2027. In
line with the contract, Rain subscribes for Globe Telecom's monthly plan for 24 months and in return Rain
receives a free Apple 256 GB Iphone 12 Pro Max handset from Globe Telecom. Rain is also entitled for
monthly network services such as 150 GB of data, unlimited all-net text, unlimited calls to Globe/TM,
and 150 minutes all-net calls. Rain will pay a monthly fee of P 2,499 and a cash out of P 46,800 upon
signing of the contract. Rain gets the handset immediately after contract signing.

Globe Telecoms normally sells monthly plans for P 1,482 per month without handset. The market value of
the Iphone 12 Pro Max is P 82,990.

Required: Assuming the Globe Telecom ask you to apply IFRS 15 with its transaction with Rain. Apply
the 5 steps process to recognize revenue and determine the revenue for the year 2027.