FR- IFRS 15-Revenue

OC signed a contract to provide office cleaning services for a client for a period of one year from 1 October 20X8 for a fee of $500 per month.

The contract required the client to make one payment to OC covering all 12 months’ service in advance. The contract cost to OC was estimated at $300 per month for wages, materials and administration costs.

OC received $6,000 on 1 October 20X8.

What profit or loss on the contract should OC recognise in its statement of profit or loss for the year ended 31 March 20X9?

• $1,200 profit

• $1,201 profit

• $1,300 profit

• $1,400 profit

On 31 March, DT received an order from a new customer, XX, for products with a sales value of $900,000. XX enclosed a deposit with the order of $90,000.

On 31 March, DT had not obtained credit references of XX and has not determined if it will meet this order.

According to IFRS 15 Revenue from Contracts with Customers, which TWO of the following indicate how DT should record this transaction in its financial statements for the year ended 31 March?

• 1. Include $900,000 as revenue for the year

• 1. Include $90,000 as revenue for the year

• 1. Do not include any amount as revenue for the year

• 1. Recognise a trade receivable for $810,000

Digger commenced contract X47 on 1 July 20X3. Performance obligations under the contract are to be satisfied over time and the stage of completion is regularly assessed. Details for the first year of the contract were as follows:

$000Amounts invoiced2,400Costs incurred at date of last assessment1,800Costs incurred since last assessment200Amounts received2,100Total contract price4,200Estimated costs to complete1,200Survey of performance completed2,520

The company invoices the customer immediately it receives an assessment of the amount of the work done.

Under IFRS15 what amount should Digger include as cost of sales for the X47 contract for the year ended 30 June 20X4?

• $2,000,000

• $3,000,000

• $5,000,000

• $7,000,000

During the month of March, Jolly Tar sells 10 units of a product for $200 each to SandyBeach.

SandyBeach can claim a 5% prompt payment discount if the invoice is paid within 30 days.

SandyBeach has also been subject to bankruptcy rumours in the national press. Jolly Tar estimates that there is a 20% probability that SandyBeach will not pay for the goods.

What amount of revenue will be included in Jolly Tar’s profit or loss in respect of this transaction?

• 1. $0

• 1. $1,600

• 1. $1,900

• 1. $2,000

In accordance with IFRS 15 Revenue from Contracts with Customers, when should the transaction price be adjusted for the time value of money?

• 1. Where an advance payment is required 

• 1. Where the entity may ultimately accept an amount lower than that initially promised in the contract 

• 1. If the contract includes a significant financing component 

• 1. If the time between the transfer of goods or services and payment exceeds two years

Which of the following is NOT a step in the five-step model set out in IFRS 15 Revenue from Contracts with Customers?

• 1. Allocation of the transaction price to the separate performance obligations

• 1. Identification of the performance obligations in the contract

• 1. Recognition of revenue when the risks and rewards of ownership pass to the customer 

• 1. Determination of the transaction price

Edifice Co is a construction company that builds apartments for sale.

Which of the following assets would NOT be recognised in the financial statements of Edifice Co in respect of contracts with customers?

• 1. Contract asset

• 1. Inventory

• 1. Property, Plant and Equipment

• 1. Receivable

On 1 January, Afador Co enters into a contract with Terrier Co for the sale of mining equipment for $350,000. Under the terms of the contract, Afador Co has an option to repurchase the equipment for $385,000 on or before 31 December. Terrier Co pays Afador Co $350,000 on 1 January.

What is the correct account for the credit entry in respect of the cash receipt on 1 January? 

• 1. Deferred income 

• 1. Financial liability 

• 1. Lease liability 

• 1. Revenue

Repro has prepared its draft financial statements for the year ended 30 September 20X4. It

has included the following transactions in revenue at the amounts stated below.

Which of these has been correctly included in revenue according to IFRS 15 Revenue from

Contracts with Customers?

• Agency sales of $250,000 on which Repro is entitled to a commission of 10%.

• Sale proceeds of $20,000 for motor vehicles which were no longer required by Repro.

• Sales of $150,000 on 30 September 20X4. The amount invoiced to and received from

  the customer was $180,m which includes $30,000 for ongoing servicing work to be

  done by Repro over the next two years.

• Sales of $200,000 on 1 October 20X3 to an established customer who (with the

  agreement of Repro) will make full payment on 30 September 20X5. Repro has a cost

  of capital of 10%.

Yling entered into a contract to construct an asset for a customer on I January 20X4 which is

expected to last 24 months. The agreed price for the contract is $5 million. At 30 September

20X4, the costs incurred on the contract were $1.6 million and the estimated remaining costs

to complete were $2.4 million. On 20 September 20X4, Yling received a payment from the

customer of $1.8 million which was equal to the full amount billed. Yling calculates contract

progress using the input method, on the basis of costs incurred compared to the estimated

total costs.

What amount would be reported as a contract asset in Yling's statement of financial

position as at 30 September 20X4?

(a)