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Roan Co enters into a contract with a major chain of retail stores. The customer...

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Accounting

Roan Co enters into a contract with a major chain of retail stores. The customer commits to buy at least $40 of products over the next 12 months. The terms of the contract require Roan Co to make a payment of $4m to compensate the customer for changes that it will need to make to its retail stores to accommodate the products. By 31 December 2021, Roan Co has transferred products with a sales value of $9m to the customer.

Required:

How much revenue should be recognized by Roan Co in theyear ended 31 December 2021?

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