Solution

IFRS 15 requires entities to assess whether a contract has a significant financing component. This consideration arises when there is a significant period of time between when the customer pays for the goods or services and when the entity transfers those goods or services to the customer.

In the case of XYZ Limited, the customer pays for the global PC support and repair coverage upfront, but the service is provided over three years. This implies that there's a significant time gap between when the customer pays for the service and when the service is fully delivered.

However, determining whether the contract has a significant financing component requires further consideration of factors such as:

1. The difference between the promised consideration and the cash selling price of the good or service. In this case, it would be relevant to know whether the $3,000 is a fair reflection of the standalone selling price of the service.
2. The combined effect of the expected length of time between the transfer of the promised good or service to the customer (three years in this case) and the prevailing interest rates in the relevant market.

In short, the determination of a significant financing component is not just about the timing of payment and delivery, but also involves considering the pricing and market factors. If the $3,000 is significantly more than what the service would normally sell for upfront, and if the prevailing interest rates in the market are significant, then it is likely that the contract does contain a significant financing component.

However, it's also important to note that the standard provides a practical expedient that an entity need not adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less. This is not the case for XYZ Limited since the service is to be provided over three years.

Finally, IFRS 15 also mentions that if the customer paid in advance for the goods or services, the objective of the financing component assessment is to consider whether the entity is effectively providing financing to the customer. This will largely depend on whether the $3,000 consideration is a fair reflection of the service's standalone selling price or not.