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WorksheetsIFRS - Are we good to go - W6
Total questions: 10
Worksheet time: 21mins
The following details apply to a contract where performance obligations are satisfied over time at 31 December 20X5.
Total contract revenue: 120,000
Costs to date: 48,000
Estimated costs to completion: 48,000
Amounts invoiced: 50,400
The contract is agreed to be 45% complete at 31 December 20X5. What amount should appear in the statement of financial as at 31 December 20X5 as a contract asset?
8,400
48,000
6,000
50,400
Statement I: An entity shall recognize a refund liability if the entity receives consideration from a customer and expects to refund some or all of that consideration to the customer.
Statement II: A refund liability is measured at the amount of consideration received (or receivable) for which the entity does not expect to be entitled.
True; True
True; False
False; True
False; False
Determining the amount to be recognised in the first year is an example of which step in the IFRS 15 5-step model?
Determining the transaction price
Recognising revenue when a performance obligation is satisfied
Identifying the separate performance obligations
Allocating the transaction price to the performance obligations
Consignment inventory is an arrangement whereby inventory is held by one party but owned by another party. It is common in the motor trade.
Which TWO of the following indicate that the inventory in question is consignment inventory?
(i) Manufacturer can require dealer to return the inventory
(ii) Dealer has no right of return of the inventory
(iii) Manufacturer bears obsolescence risk
(iv) Dealer bears slow movement risk
(i) and (ii)
(i) and (iii)
(ii) and (iv)
(iii) and (iv)
D Company is carrying out a transaction on behalf of another entity and the finance director is unsure whether D Company should be regarded as an agent or a principal in respect of this transaction.
Which one of the following would indicate that D Company is acting as an agent?
D Company is primarily responsible for fulfilling the contract.
D Company is not exposed to credit risk for the amount due from the customer.
D Company is responsible for negotiating the price for the contract.
D Company will not be paid in the form of commission.
A IT Co provides hardware, software and IT services to small business customers.A IT Co has developed an accounting software package. The company offers a supply and installation service and a separate two-year technical support service.
In accordance with IFRS 15 Revenue from Contracts with Customers, when should A IT Co recognise revenue from the combined goods and services contract?
Supply and install: on installation/Technical support: over two years
Supply and install: when payment is made/Technical support: over two years
Supply and install: on installation/Technical support: on installation
Supply and install: when payment is made/Technical support: when payment is made
A contract does not exist if …
The contract was not approved in a written form
The parties of the contract have reached unanimous consent regarding termination of the contract
The contract has no fixed duration and can be terminated or modified by either party at any time
Each party to the contract has the unilateral enforceable right to terminate a wholly unperformed contract without compensating the other party
A contract is wholly unperformed if …
(i) The entity has not yet transferred any promised goods or services to the customer
(ii) The entity has not yet received any consideration in exchange for promised goods or services
(iii) The entity is not yet entitled to receive any consideration in exchange for promised goods or services
(i) and (ii)
(i) and (iii)
(ii) and (iv)
(iii) and (iv)
Which of the following is not a criterion in combining contracts?
The contracts are negotiated together with a single commercial objective
The contracts are entered into with the same customer
The consideration to be paid for one contract is dependent on the price or performance of another contract
The goods or services promised in the contracts are a single performance obligation
ABC Company also sells a package which gives customers a free laptop when they sign a two-year contract for provision of broadband services with the amount of $600 on 1 July 2021. The laptop has a stand-alone price of $200 and the broadband contract is for $25 per month.
In accordance with IFRS 15 Revenue from contracts with customers, what amount will be recognised as revenue on each package in the year ended 31 December 2021?
439
375
600
158
