Question
Fenwick Consulting has three transactions in December 2026:
- Dec 8 — completes a staff-training project for a client and sends an invoice for $12,000, payable in 30 days.
- Dec 15 — a different client pays $5,000 in advance for a review that Fenwick will carry out in January 2027.
- Dec 22 — collects $7,000 from a client for work completed and invoiced in November.
Required:
- December Revenue — the revenue Fenwick recognises for December.
- Journal Entries — all three transactions. Use Cash, Accounts Receivable, Service Revenue and Unearned Revenue.
- Statement Impact — the combined effect of the three transactions on the financial statements.
Statements in this challenge
- December RevenueNumeric Answer
- Journal EntriesJournal Entry
- Statement ImpactStatement Impact
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IFRS 15 — Revenue from Contracts with Customers
Apply the five steps in order: identify the contract, identify the performance obligations, determine the transaction price, allocate it to the obligations, and recognise revenue as each is satisfied. Most errors come from skipping straight to the amount without first separating the obligations.
Common mistakes
- Recognising the full contract price on delivery when a distinct service obligation is still outstanding.
- Allocating the transaction price other than on relative stand-alone selling prices.
- Recognising revenue when cash is received rather than when control transfers.
Further readingIFRS 15: the five-step model