On 29 March 2018, Hot Co received an order from a new customer Cold Co...
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Accounting
On 29 March 2018, Hot Co received an order from a new customer Cold Co for goods with the sales value of 900,000. Cold Co made an advance payment of 90,000 to Hot Co for these goods. Hot Co will deliver all the goods in early April 2018.
Hot Co is considering the following possible entries for this transaction in its financial statements for the year ended 31 March 2018:
(1) Include 900,000 in revenue in the statement of profit or loss
(2) Include 90,000 in revenue in the statement of profit or loss
(3) Do not include any amount in revenue in the statement of profit or loss
(4) Recognise a trade receivable for 810,000 in the statement of financial position
(5) Recognise a current liability for 90,000 in the statement of financial position
How should Hot Co account for this transaction in its financial statements for the year ended 31 March 2018 in accordance with the IFRS:
Group of answer choices
(1) and (4)
(2) and (4)
(3) and (4)
(3) and (5)
Answer & Explanation
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