Module 3 - Part A

What is the primary goal of IFRS 15 standards?

Why is understanding an entity's revenue-earning capabilities important for investors?

Who primarily relies on information about an entity's revenue to assess its ability to repay loans?

What benefit does IFRS 15 provide to financial statement users regarding comparisons between entities?

Which aspect of revenue recognition does the IFRS 15 revenue recognition model primarily emphasize?

How does IFRS 15 benefit potential investors in an entity?

Why is the disclosure of revenue from existing contracts to be earned in future periods important under IFRS 15?

What is a key indicator of management and an entity's current performance?

What is the primary objective of IFRS 15?

Which of the following is NOT a stated benefit of IFRS 15's introduction?

IFRS 15 provides guidance on accounting for which of the following contract types?

According to the provided content, which types of contracts are outside the scope of IFRS 15?

If a contract falls partially within the scope of IFRS 15 and partially within another standard (e.g. IFRS 16), how should an entity account for it?

An entity sells a piece of equipment, which is not a standard output of their ordinary activities. Which accounting standard should it use to account for revenue from the sale?

A lessor enters into a lease agreement with a lessee that includes both lease payments and a fee for ongoing maintenance. Which standard applies to the maintenance portion of this contract?

What should a company do if another standard does not specify how to separate or initially measure parts of a contract?

IFRS 15 permits the adoption for service contracts within the scope of which other IFRS standard?

What is the correct order for applying accounting standards when a contract includes both lease payments and a service fee?

Which of the following considerations is essential when accounting for a sales contract where the customer has a right of return?

An entity provides multiple services to customers. Prior to IFRS 15, what was a common issue in the technology sector regarding revenue recognition?

Which of the following is a specific contract element for which IFRS 15 provides guidance?

Which standards provide specific exceptions to the applicability of IFRS 15?

The application of IFRS 15 means it directly impacts previous accounting guidance found where?

According to IFRS 15, what is the definition of a 'customer'?

Under IFRS 15, which of the following scenarios would be outside the scope of revenue recognition?

Which of the following is NOT a required attribute for a contract to fall within the scope of IFRS 15?

An entity determines that a contract with a customer does not have all the attributes required by IFRS 15. What is the appropriate course of action?

What constitutes a contract modification?

When should a contract modification be accounted for as a separate contract?

Under what circumstances should an entity combine two or more contracts with the same customer?

An entity has two contracts with the same customer, negotiated separately. The price of the goods in one contract depends on the performance of the other contracts. How should the entity account for these contracts?

What is the primary factor in determining whether a party is considered a 'customer' under IFRS 15?

A construction company enters into a three-year agreement with a property developer; after 12 months, the property developer experiences financial difficulties and is unlikely to meet future commitments. According to IFRS 15, what should the construction company consider?

Which of the following scenarios exemplifies a contractual relationship that likely falls under the purview of IFRS 15?

How does IFRS 15 define a contract?

Which situation would necessitate combining two or more contracts with the same customer for accounting purposes?

An entity agrees to provide additional distinct services to a customer. This modification is approved by both parties. How should the entity account for this modification?

Why is it important for an entity to apply the five-step model consistently to similar contracts?

How did IFRS 15 affect revenue recognition for telecommunications companies offering bundled 'free' handsets and monthly plans?

Under IFRS 15, how should software entities account for bundled contracts involving implementation, customization, testing, and post-implementation support?

How does IFRS 15 address changes in contract terms, such as modifications requiring additional goods or services?

What impact does IFRS 15 have on entities that previously recognized revenue progressively over time on long-term contracts?

What is the core principle of IFRS 15 regarding revenue recognition?

Which of the following is NOT a step in the IFRS 15 five-step revenue recognition model?

According to IFRS 15, what is a performance obligation?

What is the main reason for the IASB issuing IFRS 15?

What is the correct order of steps according to the IFRS 15 Revenue from Contracts with Customers five-step model?

Which of the following best describes how technology solutions can aid in implementing IFRS 15?

Which of the following industries experienced significant changes in revenue recognition due to IFRS 15?

Prior to IFRS 15, some telecommunications entities treated the cost of handsets provided with monthly plans in which of the following ways?

Under IAS 18, how did software entities typically recognize revenue from contracts involving implementation, customization, and post-implementation support?

For manufacturers whose contracts are modified to require delivery of additional goods/services at an increased price, what potential change did IFRS 15 introduce?

For entities that previously recognized revenue on long-term contracts over time, such as providers of enterprise technology solutions, what could change under IFRS 15?

Under the expected-value method, what three components are needed to calculate the expected value of the variable consideration?

When might the most likely amount method be a better predictor of variable consideration than the expected-value method?

How should an entity account for a refund liability related to consideration received from a customer?

According to IFRS 15, under what condition should variable consideration be included in the transaction price?

What does 'highly probable' mean in the context of estimating variable consideration under IFRS 15?

In assessing the likelihood of a significant revenue reversal, what two factors should an entity consider?

When assessing the magnitude of a possible revenue reversal, what should an entity consider?

What must an entity do at the end of each reporting period regarding variable consideration?

If, after reassessment at the end of a reporting period, it's highly probable that a significant revenue reversal will occur, how is this accounted for?

How is an adjustment to the refund liability amount recognized at the end of each reporting period?

When applying a chosen method for estimating variable consideration, what is required of the entity?

How could an entity choose to apply variable consideration methods?

What is considered when estimating the amount of variable consideration within the transaction price?

Which of the following describes a 'significant reversal' in the context of IFRS 15?

Under IFRS 15, an entity is contracted to provide a service with variable consideration. Initial estimates suggest a high probability of achieving the maximum bonus amount. However, halfway through the contract term, new information suggests a significant risk of not achieving any bonus. How should the entity account for this change?

Under IFRS 15, when is a contract modification considered a separate contract?

What is the primary accounting treatment when a contract modification is accounted for as a separate contract?

When the remaining goods or services are distinct after a contract modification, how is the modification accounted for?

When the remaining goods or services are not distinct after a contract modification, how is the modification accounted for?

When some of the remaining goods or services are distinct, and some are not, how is a contract modification accounted for?

Under scenario 2, where services are not distinct, what is the correct accounting treatment?

In Scenario A, if an entity had transferred control of 45 widgets at $80 per widget, and then makes a new contract to deliver more widgets at $75 per widget, what is the revenue recognised for the 45 widgets already transferred?

In Scenario B, the contract modification is not accounted for as a separate contract. Why not?

Widget Co. initially contracted to deliver 500 widgets at $50 each. After delivering 200, the contract is modified to deliver an additional 300 widgets at $45 each, with this price adjustment reflecting the bulk discount for the larger order size. Can this modification be accounted for as a separate contract?

Software Inc. agrees to provide both software licenses and ongoing tech support to a client for $100,000. After the software is delivered but before support begins, Software Inc. adds enhanced training sessions to the support package for an additional $15,000, reflecting the session's stand-alone price. How should the contract modification be treated?

Construction Co. contracts to build a warehouse for $5 million, expecting construction to take 1 year. After 6 months, due to unforeseen regulatory changes, the design is altered, increasing cost by $1 million. This additional cost reflects the market price increase for such changes. What is the appropriate accounting treatment for the modification?

Consulting Group A contracts to provide strategic planning services for $50,000 with the intention of delivering the services over 6 months. After three months, the scope is reduced, and the total fee agreed upon is $30,000. Consulting Group A has already billed $25,000. Should Consulting Group A adjust revenue recognised at the current date?

An entity agrees to provide both a product and installation services for a combined price. Midway through the installation, the customer requests a higher grade of materials which increases the installation cost. This additional cost aligns with the stand-alone selling price of the upgraded materials. How should this contract modification be accounted for?

ABC Company contracts to provide monthly maintenance services for a customer's equipment for $1,000 per month. After six months, the contract is modified to include additional equipment, increasing the monthly fee to $1,800. This additional $800 accurately reflects the fee for maintaining the additional equipment at its standalone price. How should ABC Company account for this modification?

DEF Company contracts to sell a product with a one-year warranty for $5,000, with the warranty portion valued at $500. After three months, the customer requests an extended warranty for an additional two years, priced at $800, which is the standalone selling price. How should DEF Company account for the addition of the extended warranty?

According to IFRS 15, what constitutes the transaction price of a contract?

Which of the following factors should an entity consider when determining the transaction price?

What are the two methods an entity can use to estimate variable consideration?

A construction company agrees to build a specialized storage facility. The customer is making payments in advance before the building is complete. According to IFRS 15, how should the company account for the payments received?

What is a 'distinct bundle of goods and services' according to IFRS 15?

A software company provides a customer with a software license, installation services, and technical support. The installation services do not significantly modify the software, and it can function without the updates and support. How many performance obligations exist in this contract?

Under what conditions can an entity account for a series of distinct goods or services as a single performance obligation?

What is the correct treatment of sales taxes (or GST in Australia) when determining the transaction price?

Which of the following is an example of variable consideration?

A construction company is building a warehouse with a contractual penalty of $$50,000$ if not completed by August 31, 20X6. How should the company account for this penalty when estimating the transaction price?

Which of the following best describes a performance obligation under IFRS 15?

What is the main difference between the 'expected value' and 'most likely amount' methods for estimating variable consideration?

When should an entity revise its estimate of the transaction price if the amount of variable consideration changes?

A customer orders a good with customized features. The customization significantly alters the original good, precluding alternative use of the good for the seller. Control of this good transfers to the buyer, with payment due in 90 days. When should revenue be recognized?

Which of the following is an example of consideration payable to a customer?

When allocating a discount in a contract with multiple performance obligations, what condition must be met to allocate the entire discount to specific performance obligations rather than proportionately?

Which of the following factors is LEAST likely to influence the stand-alone selling price estimate when using the adjusted market assessment approach?

In the context of IFRS 15, what constitutes 'control' of a good or service being transferred to a customer?

According to IFRS 15, when should an entity recognize revenue related to a performance obligation?

An entity sells both goods and services in a single contract. If another IFRS standard provides guidance on how to separate one or more parts of the contract, what approach should the entity follow?

What is the primary focus when allocating variable consideration within a contract under IFRS 15?

When using the 'expected cost plus a margin approach' to estimate the stand-alone selling price, which factor is most critical?

An entity regularly sells Product A for $50. It also regularly sells Product B for $75. However, when sold together, they are sold for $100. If the entity enters into a contract to sell Product A and B together for $100, how should the discount be allocated under IFRS 15?

What is a key consideration when applying the 'residual approach' to estimate the stand-alone selling price of a good or service?

What distinguishes a 'performance obligation' being satisfied at a point in time versus over a period of time under IFRS 15?

An entity provides a bonus to customers if they purchase before a specified date. How should this bonus be treated when determining the transaction price?

An entity sells software and provides updates for one year. The updates are essential for the software to function as intended. How many performance obligations exist in this scenario?

An entity enters into a contract to provide services over three years. After two years, the customer cancels the contract. How should the entity account for the remaining portion of the transaction price?

When using the residual approach, how does one calculate the stand-alone selling price?

An entity regularly sells a package of goods and services for a discounted price. According to IFRS 15, under which circumstance an entity doesn't allocate the discount proportionately to all performance obligations?

In measuring progress on performance obligations satisfied over time, what should an entity primarily consider when choosing between output and input methods?

According to IFRS 15, if an entity determines that a performance obligation is satisfied over time, how should revenue be recognized?

What is a key difference between output and input methods for measuring progress on performance obligations?

Under IFRS 15, what happens when the measure of progress towards satisfying a performance obligation changes from one reporting period to the next?

When should an entity recognize revenue at a point in time?

An entity provides a consulting service and receives payment after the final recommendation is made. Under what condition is the performance obligation satisfied at a point in time?

According to IFRS 15, under what condition can the incremental costs of obtaining a contract be recognized as an asset?

What makes a cost 'incremental' in the context of obtaining a contract with a customer?

Under IFRS 15, how can the recovery of incremental costs of obtaining a contract be achieved?

How are the costs of obtaining a contract that are not incremental treated under IFRS 15?

An entity is providing a subscription service that grants customers access to online educational materials. The customers can access the materials immediately upon signing up. Which criterion of IFRS 15 determines that revenue should be recognized over time?

A construction company is building a specialized piece of machinery for a customer under a contract. The contract specifies that the customer owns the machinery as it is being built and can take possession of the partially completed machinery at any time. Which criterion of IFRS 15 determines that revenue should be recognized over time?

A company enters into a contract to provide a highly specialized service that can only be performed by that company. The contract states that if the customer cancels the contract, the company is entitled to retain payment for work completed to date plus a reasonable profit margin. Which criterion of IFRS 15 determines that revenue should be recognized over time?

A company decides to change its method of measuring progress on a performance obligation satisfied over time. According to IFRS 15, under what circumstances is this change permissible?

Which of the following factors would indicate that a performance obligation should be satisfied at a point in time rather than over time?

How should a non-refundable payment to a customer affect the transaction price in a contract?

What is required when a contract contains a significant financing component according to IFRS 15?

What is the transaction price for a cereal contract worth $5,000,000 with a $500,000 non-refundable payment to the customer?

Under IFRS 15, how is the transaction price allocated if there is only one performance obligation in a contract?

In a contract where the customer pays significantly later than the transfer of control, how is the difference in amounts classified?

What journal entry is made by the entity at the time of land transfer to the customer?

What must an entity do to determine the stand-alone selling price of a distinct good or service?

Which approach estimates the stand-alone selling price by evaluating how much customers would pay based on market conditions?

What is the implicit interest rate in the case of a contract requiring payment 24 months after transfer?

What does the residual approach for estimating stand-alone selling price use?

How should non-cash consideration be measured when it is promised by a customer?

What happens when consideration payable to a customer exceeds the fair value of the distinct good or service?

What factors must an entity consider when estimating stand-alone selling prices?

Which of the following statements is true regarding interest revenue under IFRS 15?

Under which condition can the residual approach be used for estimating selling prices?

How should the transaction price be recorded when certain performance obligations in the contract are satisfied?

When control of the land transfers to the customer, what condition must be fulfilled for revenue recognition?

What is the primary objective of estimating a stand-alone selling price under IFRS 15?

How does consideration payable to encourage customer purchases affect revenue recognition?

What is the preferred method for estimating stand-alone selling prices when observable prices are available?

What is the significance of the cash selling price in accounting for a contract?

When an entity cannot observe a stand-alone selling price, what should it do?

Which of the following is true about the recognition of interest expense?

What must an entity do if it identifies more than one performance obligation in a contract?

If fair value cannot be reasonably estimated for non-cash consideration, how is it measured?

What should be done with the interest receivable recognized at the end of Year 1?

What does IFRS 15 stipulate about the split of transactions in contracts with a significant financing component?

What must an entity disclose regarding revenue recognized from contracts with customers under IFRS 15?

When should an entity recognize revenue from a contract liability?

Which of the following categories can be used to disaggregate revenue according to IFRS 15?

What must an entity determine at the time of entering into a contract regarding performance obligations?

Under which condition is a performance obligation considered satisfied over time?

What is a contract asset under IFRS 15?

What does it mean for an entity's performance to create or enhance an asset that the customer controls?

Which of the following must be disclosed about performance obligations?

For a performance obligation to be recognized over time, the asset created must not have what?

What does IFRS 15 require regarding the transaction price allocated to remaining performance obligations?

Which of the following is NOT included in the mandatory contract balance disclosures?

What component must be present along with the lack of an alternative use of the asset for recognizing a performance obligation over time?

What are the significant payment terms an entity must disclose according to IFRS 15?

Which of the following scenarios likely does NOT allow for performance obligations to be recognized over time?

How should an entity disclose the timing of revenue transfer under IFRS 15?

What typically indicates that substantial re-performance is required in a contract?

What does disclosing contract balances help users understand?

Which of the following best describes the concept of control within the context of performance obligations?

In the context of IFRS 15, what is meant by the term 'performance obligation'?

Which situation exemplifies when a contract liability arises?

Which type of performance obligation is least likely to be satisfied at a point in time?

What type of obligations must be disclosed regarding the performance obligations?

What could prevent an entity from recognizing revenue over time?

What information is useful to disclose regarding the performance obligations' transaction price?

How is revenue recognized when a performance obligation is satisfied over time?

Which of the following scenarios would meet the criteria for an asset to be controlled by the customer as it is created?

When determining whether to recognize revenue over time, which factor is NOT part of the assessment?

What is the estimated variable consideration based on the expected-value method for the gadgets returned?

What does the entity need to consider to determine if a contract has a significant financing component?

How is the refund liability calculated in the case of 100 gadgets sold at a price of $35 each with an estimated variable consideration of $3434?

Under what condition is the assessment of the financing component not required according to IFRS 15?

What is the highest probability outcome for the number of gadgets returned?

Which method would better predict the amount of consideration when there are multiple possible outcomes?

What happens to the estimated variable consideration if it is determined to be less than expected?

What adjustment must be made if there is a significant financing component in a contract?

What is the main reason for the conclusion that a significant revenue reversal will not occur in the given scenario?

What would be the transaction price recognized upon transfer when using the most likely amount method?

Which of the following conditions does not lead to a significant financing component?

Why can't the entity resell returned gadgets?

Which consequence results from applying the expected-value method in this scenario?

What should be done at the end of the reporting period regarding the refunded gadgets?

What method does the entity use to measure progress towards satisfying the performance obligation over time?

How often does the entity need to disclose the transaction price allocated to the unsatisfied performance obligation?

According to IFRS 15, what must an entity disclose regarding contract costs?

Which of the following is NOT a required step in the five-step revenue recognition model of IFRS 15?

What factors can potentially affect the transaction price under IFRS 15?

What is the primary objective of the disclosure requirements under IFRS 15?

What is a performance obligation under IFRS 15?

What aspect of revenue recognition does the five-step model of IFRS 15 primarily address?

What does the term 'unsatisfied performance obligation' refer to in the context of IFRS 15?

Which of the following is an example of a judgment that must be disclosed under IFRS 15?

How does IFRS 15 suggest an entity measure progress towards the completion of performance obligations?

What type of method is NOT mentioned for estimating the stand-alone selling price under IFRS 15?

What must an entity do if it identifies a significant financing component within a contract?

What is an important outcome of disclosing the estimates made by an entity under IFRS 15?

According to IFRS 15, under what circumstances does a promise to a customer constitute a performance obligation?

What are the two criteria that must be met for a good or service to be considered 'distinct' according to IFRS 15?

What is considered a 'readily available resource' that a customer can use in conjunction with a good or service to derive a benefit, according to IFRS 15?

Under IFRS 15, which of the following scenarios would indicate that two or more promises to transfer goods or services are not separable?

According to example 3.4, regarding the constuction of a library, why were the individual goods and services provided by the entity not considered 'distinct'?

An entity sells software and provides unspecified updates. How should the updates be treated according to IFRS 15?

How does IFRS 15 address situations where a promised good or service is incidental to the contract?

When does an entity identify performance obligations according to IFRS 15?

Under contract modifications, how is revenue recognized for widgets that are distinct from those already transferred?

What should an entity do if a good or service is not considered distinct?

Which factor is least likely to be an indicator that goods or services are highly interdependent or interrelated?

How should customer loyalty points awarded by a supermarket be accounted for under IFRS 15?

According to IFRS 15, how does a customer determine if they can benefit from a good or service?

What is the proper revenue recognition procedure for delivered widgets when the remaining widgets are part of a contract modification that terminates the former contract?

What is a characteristic that separates a distinct good or service from a non-distinct one?

Under IFRS 15, what is the treatment for costs incurred in fulfilling a contract that fall within the scope of IAS 2 Inventories?

According to IFRS 15, under what condition should an entity recognize an asset for costs incurred in fulfilling a contract?

An entity incurs legal fees to secure a contract with a customer. $5,000 is payable regardless of the outcome of the tender, and an additional $10,000 is payable only if the tender is successful. How should the entity account for the $5,000?

Under IFRS 15, how should an entity amortize an asset recognized from the incremental costs of obtaining a contract?

According to IFRS 15, what happens when there is a significant change in the expected timing of the transfer of goods or services to the customer?

How does IFRS 15 define the impairment loss for an asset recognized from the costs to obtain or fulfil a contract?

According to IFRS 15, what is a key element of the disclosure requirements related to contracts with customers?

A consulting entity wins a two-year contract and intends to exercise an option to extend it for another year. They incur legal fees ($25,000), travel costs ($20,000), and sales commissions ($12,500). What total amount should the entity recognize as an asset for the incremental costs of obtaining the contract if the travel costs are not incremental?

Under IFRS 15, what is the appropriate accounting treatment for the costs incurred to fulfill a contract if those costs enhance an asset that is also used fulfilling other contracts?

An entity recognizes an asset related to contract fulfillment costs. At the end of the first year, there are indications that the customer may not have the ability to pay the full contract price. What action should the entity take?

An entity incurs $10,000 in costs to obtain a contract. The entity has a policy to expense costs to obtain a contract when those upfront costs are incurred if the amortization period is one year or less. The contract is for 11 months. How should they account for these costs?

According to IFRS 15, what specific information about assets recognized from incremental costs of obtaining a contract must be disclosed?

An entity initially anticipates a two-year contract. However, it eventually renews this contract for an additional three years. How does this extension impact the asset amortization?

Which of the following costs can be appropriately included in the costs to fulfil a contract that are eligible for capitalization as an asset under IFRS 15?

An entity determines the amortisation period of an asset recognised for contract costs to be three years, and the asset amount is $12,500. At the end of the second year, the entity does not exercise the option to extend the contract. Under IFRS 15, how should the entity handle the remaining unamortised amount?