Telecommunications
Free Handset With Plan — Cost Allocation
Allocating the cost of a 'free' handset across the handset and service plan performance obligations.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Contract Asset (Handset Allocation) | Asset (+) | 150.00 | - |
| Handset Inventory | Asset (-) | - | 250.00 |
| Cost of Goods Sold (Allocated to Handset POB) | Expense (+) | 100.00 | - |
💡 Accountant's Note
Even a 'free' handset has a cost. IFRS 15 requires allocating the transaction price across all performance obligations. The contract asset represents the revenue already earned (on the handset) but not yet billed — to be recovered through service fees over the contract.
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