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CIMAPRA19-F02-1 Exam - Topic 1 Question 21 Discussion

RST sells computer equipment and prepares its financial statements to 31 December.On 30 September 20X5 RST soldcomputer software along with a two year maintenance package to a customer. The customer is given the right to return the goods within six months and claim a full refund if they are not satisfied with the computer software. The risk of return is considered to be insignificant for RST.How should the revenue from this transaction and the right of return be recognised in thefinancial statements for the year ended 31 December 20X5?
D) Recognise 100% of the revenue from the sale of goods,12.5% of the revenue from the maintenance contract and create aprovision for the anticipated level of returns.
A) Recognise 100% of the revenue from both the sale of goods and the maintenance contract and create aprovision for the anticipated level of returns.
B) Do not recognise any revenue from the sale of goods or the maintenance contract and do not create aprovision for the anticipated level of returns.
C) Recognise 12.5% of the revenue from both the sale of goods and the maintenance contract and do not create aprovision for the anticipated level of returns.

CIMAPRA19-F02-1 Exam - Topic 1 Question 21 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 21
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

RST sells computer equipment and prepares its financial statements to 31 December.

On 30 September 20X5 RST soldcomputer software along with a two year maintenance package to a customer. The customer is given the right to return the goods within six months and claim a full refund if they are not satisfied with the computer software. The risk of return is considered to be insignificant for RST.

How should the revenue from this transaction and the right of return be recognised in thefinancial statements for the year ended 31 December 20X5?

Show Suggested Answer Hide Answer
Suggested Answer: D

by Merlyn at May 06, 2022, 09:52 PM

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Eric
9 months ago
The risk of return being insignificant is key for revenue recognition!
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Vincent
9 months ago
Isn't it risky to recognize 100% of the revenue with a return policy?
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Sommer
9 months ago
Wait, why would they only recognize 12.5% of the maintenance revenue?
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Jeanice
9 months ago
I disagree, option A seems more straightforward.
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Skye
9 months ago
I think option D makes the most sense here.
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Kristel
10 months ago
Hmm, I'm not entirely sure about this one. I'll need to think it through and maybe even do a quick search to refresh my memory on the different roles and their permissions.
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Paris
10 months ago
This one seems pretty straightforward. I think the answer is A - Work center utilization.
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An
10 months ago
Okay, I think I've got a good handle on this. The key is recognizing the distinctions between audits and management reviews in terms of their goals, formality, and appropriate use cases.
upvoted 0 times
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