ng on 30 June. DD Armour Ltd offers customers the option to purchase a standard armoured vehicle or, if they prefer, the armoured vehicle can be made specific to their requirements. Custom-made armoured vehicles take 9 months to manufacture and deliver. All vehicles, whether custom-made or standard, must be serviced every 15 000km. South African customers have the option to purchase the armoured vehicles with a 120 000 km service plan. A service plan normally sells for R37 500. An armoured vehicle without the service option is sold for R970 000. The following information relates to the revenue transactions of DD Armour Ltd during the current financial year: 1.1 On 1 August 20x21 DD Armour Ltd signed a contract with S4G
Armour Ltd is situated in Gauteng, South Africa, and specialises in the manufacture and sale of armoured vehicles. The armoured vehicles are sold in South Africa and internationally. The company has a financial year ending on 30 June.
DD Armour Ltd offers customers the option to purchase a standard armoured vehicle or, if they prefer, the armoured vehicle can be made specific to their requirements. Custom-made armoured vehicles take 9 months to manufacture and deliver. All vehicles, whether custom-made or standard, must be serviced every 15 000km. South African customers have the option to purchase the armoured vehicles with a 120 000 km service plan. A service plan normally sells for R37 500. An armoured vehicle without the service option is sold for R970 000.
The following information relates to the revenue transactions of DD Armour Ltd during the current financial year:
1.1 On 1 August 20x21 DD Armour Ltd signed a contract with S4G Ltd, a South African security company, for the purchase of 10 armoured vehicles at R985 000 per vehicle, including the 120 000km service plan option. The contract requires S4G Ltd to pay the purchase price, in cash, on the date of delivery of the vehicles. S4G Ltd took legal ownership of the 10 vehicles on 1 November 20x21, and the total purchase price was also paid on this date. All 10 vehicles underwent the 15 000 km service during the current financial year.
Additional information:
DD Armour Ltd uses straight lining to measure the progress of performance obligations satisfied over
time.
DD Armour Ltd performs credit and background checks on all customers to ensure creditworthiness
before a contract is signed.
QUESTION 1
a) Discuss the correct recognition and measurement of transactions 1.1 in the accounting records of DD Armour Ltd for the period ended 30 June 20x22, in terms of IFRS 15, Contracts with customers.
The discussion must be supported with calculations.
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