The arrangement that meets the attributes of a contract under IFRS 15 is WatchThis Ltd.'s offer to Kalani. This is a contract because it involves an exchange of goods or services (one month of free film service) for consideration (Kalani's commitment to potentially pay the monthly charge after the trial period, unless she cancels before the trial ends). The other scenarios do not necessarily form a contract under IFRS 15, as they either don't involve consideration (Pretty Petals Pty Ltd.'s magazine offer) or are not explicit agreements with defined terms and conditions (Naomi's appointment with Wellness Ltd.) or do not have clearly identifiable performance obligations and payment (Pretty Petals Pty Ltd. and Naomi's appointment). Influence Inc.'s agreement with Catering 4 U Ltd. is a contract but not within the context of the provided options since it's a three-year service agreement, not a one-time transaction.
Identifying Contractual Obligations: Understanding IFRS 15 Compliance in Subscription Services
Which one of the following arrangements meets the attributes of a contract under IFRS 15?
Pretty Petals Pty Ltd., a monthly garden magazine publisher offers to provide three months of free magazine isuess to all potential customers. The offer is on a trial basis, with the aim of enticing those participating in the trial to sign up for an annual paid subscription. Levi, a keen gardener, is delighted and accepts the free trial offer
WatchThis Ltd., an on-line film service, offers potential customers a one-month free trial after which the cost is MU12.99 per month. Kalani signs up for the free trial. Kalani has to provide her credit card details during registration, which will be used to debit the monthly charge once the trial has ended, unless Kalani cancels (at no charge) before the trial ends.
Naomi has some health issues and after speaking with a friend phones Wellness Ltd. to book an appointment. The receptionist assures her that there is no cancellation fee if she cannot make it. Naomi subsequently finds a series of free videos on the internet which address her symptoms and detail natural remedies and she forgets about her appointment.
Influence Inc. arranges social networking functions for the busy city of Utopia. Catering 4 U Ltd. enters into a three year contract with Influence Inc. to provide a minimum of 100 food platters per year. The price of each platter depends on the specific menu selected
