10 Questions
What is the nature of the promise made by the entity to the customer?
To provide the customer with a ticket to fly
Why is the entity considered a principal in the transaction?
Because it controls the ticket before transferring it to the customer
What does 'inventory risk' refer to in the context of the entity's operations?
The risk of losing value on unsold tickets
How does the entity determine whether it controls the ticket before transferring it to the customer?
By considering specific indicators as principal or agent under the contract
Why does the entity conclude that it is a principal in the transaction?
Because it has discretion in setting sales prices for tickets
What aspect of providing tickets makes the entity responsible for fulfilling the contract?
Being primarily responsible for fulfilling the contract
Why is the entity not responsible for providing the flight itself?
Because airlines are responsible for flight logistics
'Indian Accounting Standard 115' pertains to which area of accounting?
"Revenue Recognition"
'Company D Ltd.' is mentioned in the text to provide an example related to what?
Business entities' contractual arrangements
What role does 'discretion in setting sales prices' play in determining a company's position as a principal or agent?
Can influence whether a company is considered a principal or agent
Learn about contract modifications in financial reporting, including different forms such as partial termination, extending the contract term, and adding new goods/services. Understand how contract modifications can be approved through written, oral, or implied means.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
