PFRS 15 Comprehensive Theory Quiz

What is the primary objective of PFRS 15?

• To prescribe recognition and measurement of leases

• To establish principles for revenue recognition from contracts with customers

• To prescribe accounting for financial instruments

• To establish procedures for taxation

PFRS 15 does not apply to:

• Contracts for construction of assets

• Contracts for the sale of goods to customers

• Leases

• Service contracts

Which of the following is not a criterion for identifying a contract under PFRS 15?

• Contract approval and commitment

• Identification of payment terms

• The contract can be cancelled at any time without consequences

• It is probable that the entity will collect consideration

If a contract does not meet the Step 1 criteria, any consideration received is:

• Recognized as revenue

• Deferred as a liability

• Written off as bad debt

• Transferred to retained earnings

A performance obligation exists when:

• The customer cannot benefit from a good or service

• Promised goods/services are not distinct

• The good or service is distinct and separately identifiable

• The contract is cancelled

Which is NOT a feature of distinct goods/services?

• Customer can benefit from it separately

• Highly integrated with other goods/services

• Separately identifiable in the contract

• Transferable without other elements

Transaction price is:

• The amount of revenue recognized regardless of performance

• The amount of consideration the entity expects to be entitled to

• The maximum possible price

• The stand-alone selling price

Which of the following methods is used to estimate variable consideration?

• Weighted average

• Expected value

• Both A and B

• Historical cost

Allocation of transaction price to performance obligations is based on:

• Management discretion

• Stand-alone selling prices

• Total contract price equally divided

• Production cost

When the stand-alone selling price is not directly observable, the entity:

• Estimates it using adjusted market assessment, expected cost plus margin, or residual approach

• Uses any available price

• Ignores allocation

• Defers revenue recognition