TPPG Ltd is a telecommunications provider. On 1 January 2020, the company entered into acontract to sell a phone set and to provide two-years’ line service to a customer for $22 a month.The stand-alone selling price of the phone set and the service line is $120 and $20 respectively.Required:(a) Identify the performance obligations in this contract. (b) How much revenue should be recognised in the year ended 31 December 2020. Showall your workings clearly and round off answers to the nearest cent, where applicable.(c) Based on your answers in (b) above, prepare the necessary journal entries.

Question

TPPG Ltd is a telecommunications provider. On 1 January 2020, the company entered into a
contract to sell a phone set and to provide two-years’ line service to a customer for $22 a month.
The stand-alone selling price of the phone set and the service line is $120 and $20 respectively.
Required:
(a) Identify the performance obligations in this contract. 
(b) How much revenue should be recognised in the year ended 31 December 2020. Show
all your workings clearly and round off answers to the nearest cent, where applicable.
(c) Based on your answers in (b) above, prepare the necessary journal entries.

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