Module 3 - Part A

<p>It unifies revenue recognition practices and requires detailed disclosures, enabling more informed assessments of an entity’s performance relative to others. (B)</p> Signup and view all the answers

<p>Determining the timing and amount of revenue to be recognized. (B)</p> Signup and view all the answers

<p>By providing information on an entity’s revenue-earning capacity to evaluate their potential return on investment. (C)</p> Signup and view all the answers

<p>It acts as a signal of future performance, allowing users to understand an entity’s performance capacity in the future. (A)</p> Signup and view all the answers

<p>The revenue generated from its activities (C)</p> Signup and view all the answers

<p>To establish a comprehensive model for revenue recognition applicable across all entities and contracts with customers. (C)</p> Signup and view all the answers

<p>Providing a detailed methodology for expense allocation. (D)</p> Signup and view all the answers

<p>Contracts with a right of return period. (C)</p> Signup and view all the answers

<p>Lease contracts within the scope of IFRS 16. (B)</p> Signup and view all the answers

<p>Apply the other standard first to separate or measure relevant parts, then apply IFRS 15 to the remainder. (B)</p> Signup and view all the answers

<p>IFRS 15 Revenue from Contracts with Customers (C)</p> Signup and view all the answers

<p>IFRS 15, Revenue from Contracts with Customers. (B)</p> Signup and view all the answers

<p>Apply IFRS 15 to the entire contract. (C)</p> Signup and view all the answers

<p>IFRS 17 Insurance Contracts (C)</p> Signup and view all the answers

<p>Apply IFRS 16 first, then IFRS 15. (A)</p> Signup and view all the answers

<p>The entity needs to consider both when to recognize revenue and the amount to be recognized. (B)</p> Signup and view all the answers

<p>Previous revenue standards lacked clear guidance on the timing of revenue recognition. (B)</p> Signup and view all the answers

<p>Contracts with options for customers to purchase additional goods or services at a discount. (D)</p> Signup and view all the answers

<p>IFRS 16 Leases and IFRS 17 Insurance Contracts (C)</p> Signup and view all the answers

<p>IAS 16 Property, Plant and Equipment. (D)</p> Signup and view all the answers

<p>A party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration. (A)</p> Signup and view all the answers

<p>A research center receiving a grant where the grantor cannot specify how the research output will be used. (A)</p> Signup and view all the answers

<p>The contract is in written form and notarized. (B)</p> Signup and view all the answers

<p>Do not apply IFRS 15, but continually reassess the contract to determine whether all attributes are subsequently present. (B)</p> Signup and view all the answers

<p>A change in the scope or price of a contract that is approved by both contracting parties. (C)</p> Signup and view all the answers

<p>When the scope of the contract increases because of the addition of promised goods or services that are distinct. (D)</p> Signup and view all the answers

<p>When the contracts are negotiated as a package with a single commercial objective. (D)</p> Signup and view all the answers

<p>Combine the contracts into a single contract. (C)</p> Signup and view all the answers

<p>Whether the party obtains the output of the entity's ordinary activities in exchange for consideration. (C)</p> Signup and view all the answers

<p>The company should reassess the contract continually to determine whether all attributes are subsequently present. (B)</p> Signup and view all the answers

<p>A software firm licensing its software to a client for a fee. (B)</p> Signup and view all the answers

<p>An agreement between two or more parties that creates enforceable rights and obligations. (D)</p> Signup and view all the answers

<p>The goods or services promised in the contracts are a single performance obligation. (B)</p> Signup and view all the answers

<p>As a separate contract, if the additional goods or services are distinct. (A)</p> Signup and view all the answers

<p>To ensure comparability and consistency in financial reporting. (B)</p> Signup and view all the answers

<p>It required them to allocate the total contract price between the handset and the monthly plan, recognizing handset revenue earlier. (B)</p> Signup and view all the answers

<p>Allocate the contract price to each distinct service and recognize revenue upon completion of each service. (A)</p> Signup and view all the answers

<p>It provides detailed requirements to determine whether a change should be treated as a separate contract or a modification to an existing one. (A)</p> Signup and view all the answers

<p>It imposes stringent requirements that must be satisfied before revenue can be recognized progressively over time. (B)</p> Signup and view all the answers

<p>Recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration expected in exchange. (A)</p> Signup and view all the answers

<p>Recognize revenue when the company has the capacity to deliver the goods or services (A)</p> Signup and view all the answers

<p>A promise to transfer a distinct good or service to the customer. (C)</p> Signup and view all the answers

<p>To provide clear guidance to entities responsible for technological advancements on how to account for their complex transactions. (C)</p> Signup and view all the answers

<p>Identify the contract(s) with the customer; Identify the performance obligations in the contract; Determine the transaction price of the contract; Allocate the transaction price to the performance obligations in the contract; Recognize revenue when (or as) the entity satisfies a performance obligation (A)</p> Signup and view all the answers

<p>By automating allocations of transaction price, costs and discounts to different customers and services provided. (D)</p> Signup and view all the answers

<p>Technology. (A)</p> Signup and view all the answers

<p>Amortizing it over the minimum contract period. (C)</p> Signup and view all the answers

<p>By reference to the stage of completion of the transaction, recognizing revenue over time as services were performed. (B)</p> Signup and view all the answers

<p>IFRS 15 introduced the potential to change how they account for revenue when a contract is modified. (B)</p> Signup and view all the answers

<p>If the IFRS 15 requirements are not satisfied, these entities would recognize revenue at a point in time instead of over time. (A)</p> Signup and view all the answers

<p>Possible outcomes of a contract, the probability of each outcome occurring, and the consideration amount under each outcome. (A)</p> Signup and view all the answers

<p>When the contract has only two possible outcomes. (D)</p> Signup and view all the answers

<p>Measure it at the amount of consideration received for which the entity does not expect to be entitled and not include this in the transaction price. (D)</p> Signup and view all the answers

<p>When it is highly probable that a significant reversal in cumulative revenue recognized will not occur. (B)</p> Signup and view all the answers

<p>Significantly more likely than probable. (D)</p> Signup and view all the answers

<p>The likelihood and magnitude of the revenue reversal. (A)</p> Signup and view all the answers

<p>The variable amount relative to the total consideration for each performance obligation. (A)</p> Signup and view all the answers

<p>Update the transaction price to reflect the amount of consideration to which it expects to be entitled and reassess whether the variable consideration is constrained. (D)</p> Signup and view all the answers

<p>This amount is excluded from the transaction price. (B)</p> Signup and view all the answers

<p>As revenue (or a decrease in revenue). (D)</p> Signup and view all the answers

<p>The entity is required to apply the chosen method consistently to similar types of variable consideration in other contracts. (D)</p> Signup and view all the answers

<p>An entity is permitted to choose different methods for estimating different types of variable consideration within one contract. (C)</p> Signup and view all the answers

<p>The likelihood that this amount will be realized. (D)</p> Signup and view all the answers

<p>A significant downward adjustment in the amount of previously recognised revenue. (B)</p> Signup and view all the answers

<p>Update the transaction price to reflect the revised estimate, potentially excluding some or all of the bonus if a significant revenue reversal is highly probable. (D)</p> Signup and view all the answers

<p>When the promised goods or services are distinct and the price reflects stand-alone selling prices. (B)</p> Signup and view all the answers

<p>Account for the remaining performance obligations under the existing contract, and account for modification separately including step 2 onwards. (C)</p> Signup and view all the answers

<p>As a replacement of the existing contract with a new contract. (A)</p> Signup and view all the answers

<p>As part of the existing contract. (D)</p> Signup and view all the answers

<p>Partly as a new contract and partly as a modification of the existing contract. (A)</p> Signup and view all the answers

<p>The entity retrospectively adjusts recognised revenue to reflect the contract modification's effect on the transaction price and the entity's progress towards completing the performance obligation. (C)</p> Signup and view all the answers

<p>$3,600 (A)</p> Signup and view all the answers

<p>Because the agreed price does not reflect the stand-alone selling price of the additional 40 widgets. (A)</p> Signup and view all the answers

<p>No, because the goods or services are likely not distinct and the adjusted price for all remaining widgets (original and new) does not reflect their stand-alone selling prices. (D)</p> Signup and view all the answers

<p>As a separate contract if the training sessions are distinct from the original services and priced at stand-alone value. (B)</p> Signup and view all the answers

<p>Treat the contract modification as a separate contract and re-evaluate contract considerations. (C)</p> Signup and view all the answers

<p>Yes, revenue already recognised must be retrospectively adjusted to reflect the contract modification. (C)</p> Signup and view all the answers

<p>This should be accounted for as a separate contract due to the change in materials and corresponding price reflecting the stand-alone value. (A)</p> Signup and view all the answers

<p>ABC Company should treat the contract modification as a separate contract because it is directly related to the change and accurately reflects the stand-alone price. (B)</p> Signup and view all the answers

<p>As a separate contract, since the extended warranty is priced at its stand-alone selling price and is distinct from the original warranty service. (B)</p> Signup and view all the answers

<p>The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services, excluding amounts collected on behalf of third parties. (B)</p> Signup and view all the answers

<p>The existence of a significant financing component in the contract and non-cash consideration. (A)</p> Signup and view all the answers

<p>The 'expected value' and 'most likely amount' methods. (A)</p> Signup and view all the answers

<p>Recognize the payments as deferred revenue or contract liability until the performance obligations are satisfied. (D)</p> Signup and view all the answers

<p>Goods and services that are highly interrelated and the entity provides a significant service of integrating them into a combined output. (A)</p> Signup and view all the answers

<p>Three performance obligations: software license, installation service, and technical support. (C)</p> Signup and view all the answers

<p>If each distinct good or service is substantially the same, has the same pattern of transfer, and represents a performance obligation to be satisfied over time, using the same method to measure progress. (B)</p> Signup and view all the answers

<p>Deduct sales taxes from the transaction price as these are collected on behalf of a third party. (B)</p> Signup and view all the answers

<p>A performance bonus offered to the entity upon achieving a specific milestone. (D)</p> Signup and view all the answers

<p>Include the penalty as a reduction in the transaction price to the extent that it is probable the penalty will be incurred. (D)</p> Signup and view all the answers

<p>A promise in a contract to transfer a distinct good or service to the customer. (B)</p> Signup and view all the answers

<p>The 'expected value' method is a probability-weighted average, while the 'most likely amount' is the single most likely outcome. (D)</p> Signup and view all the answers

<p>At each reporting period to reflect changes in circumstances. (A)</p> Signup and view all the answers

<p>Revenue should be recognized when the customization is complete because the seller cannot use the altered good for any other purpose. (D)</p> Signup and view all the answers

<p>A lump-sum payment made by an internet service provider to a retailer for signing up new customers. (C)</p> Signup and view all the answers

<p>The entity can demonstrate that the discount predominantly relates to those specific performance obligations, based on observable evidence. (B)</p> Signup and view all the answers

<p>The entity's internal cost structure. (A)</p> Signup and view all the answers

<p>The ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset. (D)</p> Signup and view all the answers

<p>When (or as) the entity satisfies the performance obligation by transferring control of the promised good or service to the customer. (B)</p> Signup and view all the answers

<p>Apply the guidance in the other IFRS standard, as well as IFRS 15, concurrently to the related components. (B)</p> Signup and view all the answers

<p>Allocate variable consideration proportionately to all performance obligations unless it is specifically related to one or more performance obligations. (B)</p> Signup and view all the answers

<p>Accurately estimating the internal costs of satisfying the performance obligation and adding an appropriate profit margin. (D)</p> Signup and view all the answers

<p>Allocate the discount proportionally based on the stand-alone selling prices. (D)</p> Signup and view all the answers

<p>The degree of variability in the selling price of the good or service. (D)</p> Signup and view all the answers

<p>Whether the customer simultaneously receives and consumes the benefits of the entity’s performance. (A)</p> Signup and view all the answers

<p>It may be treated as variable consideration to be allocated appropriately. (A)</p> Signup and view all the answers

<p>Two: the software and the subsequent updates. (A)</p> Signup and view all the answers

<p>Reassess whether the remaining services constitute a performance obligation and adjust revenue recognition accordingly. (A)</p> Signup and view all the answers

<p>Calculated as total transaction price less the sum of the observable standalone selling prices (A)</p> Signup and view all the answers

<p>If the entity has observable evidence that the entire discount relates to one or more specific performance obligations. (D)</p> Signup and view all the answers

<p>The nature of the good or service promised to transfer to the customer. (A)</p> Signup and view all the answers

<p>Revenue should be recognized based on a single method chosen at inception and applied consistently until complete satisfaction. (C)</p> Signup and view all the answers

<p>Output methods are based on direct measurements of value to the customer, while input methods are based on the entity's efforts. (B)</p> Signup and view all the answers

<p>The change in the measure of progress is recognized as revenue in the current reporting period and disclosed as a change in estimate. (D)</p> Signup and view all the answers

<p>When the entity transfers control of the asset to the customer. (B)</p> Signup and view all the answers

<p>The customer benefits from the entity's performance only upon completion of the service and the final recommendation. (A)</p> Signup and view all the answers

<p>If the entity expects to recover those costs and the costs are incremental to obtaining the contract. (B)</p> Signup and view all the answers

<p>The cost would not have been incurred if the contract had not been obtained. (A)</p> Signup and view all the answers

<p>Either through direct reimbursement by the customer or indirectly through the profit margin of the contract. (D)</p> Signup and view all the answers

<p>They are recognized as an expense when incurred, unless they are chargeable to the customer regardless of whether the contract is obtained. (B)</p> Signup and view all the answers

<p>The customer simultaneously receives and consumes the benefits provided by the entity's performance. (B)</p> Signup and view all the answers

<p>The entity's performance creates or enhances an asset (e.g., work in progress) that the customer controls as the asset is created or enhanced. (D)</p> Signup and view all the answers

<p>The entity's performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. (C)</p> Signup and view all the answers

<p>Once the method has been chosen, an entity cannot change the method of measuring progress, and must apply it consistently from inception until complete satisfaction of the performance obligation. (A)</p> Signup and view all the answers

<p>The customer only benefits from the entity's performance at the end of the contract when a final deliverable is provided. (C)</p> Signup and view all the answers

<p>It should be a reduction in the transaction price. (B)</p> Signup and view all the answers

<p>The entity must account for each transaction separately. (D)</p> Signup and view all the answers

<p>$4,500,000 (D)</p> Signup and view all the answers

<p>The entire transaction price relates to the single performance obligation. (B)</p> Signup and view all the answers

<p>As interest revenue or interest expense. (A)</p> Signup and view all the answers

<p>Dr Receivable 50000; Cr Revenue 50000 (B)</p> Signup and view all the answers

<p>Evaluate current market conditions and use observable selling prices. (D)</p> Signup and view all the answers

<p>Market assessment approach (B)</p> Signup and view all the answers

<p>7.5 percent (A)</p> Signup and view all the answers

<p>The transaction price minus the sum of observable selling prices of other goods. (A)</p> Signup and view all the answers

<p>At fair value or stand-alone selling price. (A)</p> Signup and view all the answers

<p>The excess is treated as a reduction of the transaction price. (C)</p> Signup and view all the answers

<p>Market conditions and entity-specific factors. (B)</p> Signup and view all the answers

<p>Interest revenue is recognized only to the extent that a contract asset or liability is recognized. (A)</p> Signup and view all the answers

<p>For highly variable selling prices. (B)</p> Signup and view all the answers

<p>As the individual performance obligations are satisfied. (C)</p> Signup and view all the answers

<p>The entity does not expect to refund any consideration. (B)</p> Signup and view all the answers

<p>To provide a faithful representation of the selling price. (D)</p> Signup and view all the answers

<p>It reduces the transaction price and thus revenue recognized. (A)</p> Signup and view all the answers

<p>Adjusted market assessment approach (D)</p> Signup and view all the answers

<p>It determines the framework for revenue recognition. (B)</p> Signup and view all the answers

<p>Use the method that provides a faithful representation of the price. (D)</p> Signup and view all the answers

<p>It is recognized only if the customer benefits from financing. (D)</p> Signup and view all the answers

<p>Allocate the transaction price based on stand-alone selling prices to the obligations. (A)</p> Signup and view all the answers

<p>As the stand-alone selling price of the goods or services. (A)</p> Signup and view all the answers

<p>It should be recognized and recorded in the financial statements. (B)</p> Signup and view all the answers

<p>They must be accounted for separately. (B)</p> Signup and view all the answers

<p>Disaggregated revenue based on economic factors. (C)</p> Signup and view all the answers

<p>When the services are provided. (D)</p> Signup and view all the answers

<p>Type of good or service. (A)</p> Signup and view all the answers

<p>Whether it will satisfy the performance obligation over time or at a point in time (D)</p> Signup and view all the answers

<p>The customer simultaneously receives and consumes the benefits of the performance (D)</p> Signup and view all the answers

<p>A right to receive consideration conditioned on future performance. (B)</p> Signup and view all the answers

<p>The customer benefits from the asset as it is created or enhanced (C)</p> Signup and view all the answers

<p>When the entity typically satisfies its performance obligations. (C)</p> Signup and view all the answers

<p>An alternative use to the entity (C)</p> Signup and view all the answers

<p>Disclosure of amounts expected to be recognized as revenue. (C)</p> Signup and view all the answers

<p>The total number of contracts signed. (D)</p> Signup and view all the answers

<p>The entity has a right to payment for performance completed to date (C)</p> Signup and view all the answers

<p>Payment due dates and any financing components. (A)</p> Signup and view all the answers

<p>The contract includes construction of a highly customized asset for a specific customer (A)</p> Signup and view all the answers

<p>Based on performance obligations satisfaction. (C)</p> Signup and view all the answers

<p>There is evidence that the customer has changed their requirements (C)</p> Signup and view all the answers

<p>The relationship between revenue recognized and changes in contract balances. (B)</p> Signup and view all the answers

<p>The customer must be able to use the asset as it is being created (B)</p> Signup and view all the answers

<p>An entity's promise to transfer goods or services to a customer (B)</p> Signup and view all the answers

<p>When payment is received before delivering a good or service. (C)</p> Signup and view all the answers

<p>Recurring service contracts such as cleaning services (A)</p> Signup and view all the answers

<p>Obligations for returns, refunds, and similar commitments. (D)</p> Signup and view all the answers

<p>The entity's performance creating an asset that has alternative use (D)</p> Signup and view all the answers

<p>Quantitative and qualitative explanations of revenue recognition timing. (D)</p> Signup and view all the answers

<p>Gradually as the performance obligation is completed over time (B)</p> Signup and view all the answers

<p>A contractor builds a unique building for a specific customer (A)</p> Signup and view all the answers

<p>The total financial value of the contract (D)</p> Signup and view all the answers

<p>$3434 (B)</p> Signup and view all the answers

<p>The difference between promised consideration and the cash selling price (A)</p> Signup and view all the answers

<p>$66 (D)</p> Signup and view all the answers

<p>When the period between transfer and payment is one year or less (C)</p> Signup and view all the answers

<p>98 gadgets (B)</p> Signup and view all the answers

<p>Expected-value method (D)</p> Signup and view all the answers

<p>Revenue recognized must be decreased (C)</p> Signup and view all the answers

<p>The transaction price is reduced based on market interest rates (A)</p> Signup and view all the answers

<p>There is significant experience in estimating returns (B)</p> Signup and view all the answers

<p>$3430 (D)</p> Signup and view all the answers

<p>Cash payment at transfer (B)</p> Signup and view all the answers

<p>They are customized for the specific customer (D)</p> Signup and view all the answers

<p>Revenue recognized reflects potential future returns (A)</p> Signup and view all the answers

<p>Assess the number of gadgets returned and adjust accordingly (B)</p> Signup and view all the answers

<p>Time-based output method (A)</p> Signup and view all the answers

<p>At the end of each reporting period (B)</p> Signup and view all the answers

<p>A description of judgments made in determining costs (D)</p> Signup and view all the answers

<p>Recognize warranty provisions (B)</p> Signup and view all the answers

<p>Variable consideration and significant financing components (B)</p> Signup and view all the answers

<p>To provide transparency about revenue and cash flows (A)</p> Signup and view all the answers

<p>A promise to transfer goods or services to a customer (A)</p> Signup and view all the answers

<p>Identification and satisfaction of performance obligations (C)</p> Signup and view all the answers

<p>Obligations for contracts that have not yet been fulfilled (C)</p> Signup and view all the answers

<p>Estimated time of contract fulfillment (C)</p> Signup and view all the answers

<p>Using either output or input methods (A)</p> Signup and view all the answers

<p>Historical selling price analysis (A)</p> Signup and view all the answers

<p>Adjust the transaction price for the time value of money (D)</p> Signup and view all the answers

<p>It helps users assess the quality of earnings reported (D)</p> Signup and view all the answers

<p>If it involves the transfer of a good or service (or bundle) that is distinct or a series of distinct goods/services that are substantially the same with the same transfer pattern. (A)</p> Signup and view all the answers

<p>The customer can benefit from the good or service either on its own or together with other readily available resources, and the entity’s promise to transfer the good or service is separately identifiable from other promises in the contract. (A)</p> Signup and view all the answers

<p>A good or service that is acquired separately from the entity or another party, or a resource that the customer has already obtained from the entity either under the contract or from other transactions or events. (C)</p> Signup and view all the answers

<p>The entity provides a significant service of integrating the goods or services with other goods or services promised in the contract into a combined item or items. (A)</p> Signup and view all the answers

<p>The goods and services, even through the customer could benefit from them either on their own or together with other readily available resources, are not distinct. (A)</p> Signup and view all the answers

<p>The software and the updates should be accounted for as a single performance obligation. (B)</p> Signup and view all the answers

<p>Incidental goods or services may still give rise to a performance obligation if distinct. (C)</p> Signup and view all the answers

<p>At the beginning of the contract. (A)</p> Signup and view all the answers

<p>The modification is accounted for as a termination of the original contract and creation of a new contract, with revenue recognized based on the revised quantities and prices. (D)</p> Signup and view all the answers

<p>Combine the good or service with other promised goods or services until the entity identifies a bundle of goods or services that are distinct. (A)</p> Signup and view all the answers

<p>Each of the goods or services is provided by a different third-party vendor. (A)</p> Signup and view all the answers

<p>They should be accounted for as a separate performance obligation if they are distinct. (D)</p> Signup and view all the answers

<p>Through its use, consumption, or sale (for an amount greater than its scrap value) or if it is otherwise held in a way that generates economic benefits. (B)</p> Signup and view all the answers

<p>The revenue is recognized by combining the amount recognized from the former contract and the product of the new widgets times the updated price. (B)</p> Signup and view all the answers

<p>A distinct good or service can be identified separately, and the customer can benefit from it alone or with other readily available goods. (C)</p> Signup and view all the answers

<p>The costs should be accounted for in accordance with IAS 2 Inventories. (B)</p> Signup and view all the answers

<p>If the costs relate directly to a contract, are expected to be recovered, and enhance resources to be used in satisfying future performance obligations. (A)</p> Signup and view all the answers

<p>Recognize the $5,000 as an expense immediately, as it's incurred regardless of the tender's outcome. (C)</p> Signup and view all the answers

<p>On a systematic basis consistent with the transfer of goods or services to the customer. (A)</p> Signup and view all the answers

<p>The entity updates the amortization to reflect the change, accounted for as a change in accounting estimate under IAS 8. (A)</p> Signup and view all the answers

<p>The extent to which the carrying amount of the asset exceeds the expected remaining consideration less the costs to provide the related goods or services. (D)</p> Signup and view all the answers

<p>Disclosure of sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. (B)</p> Signup and view all the answers

<p>$35,000 (B)</p> Signup and view all the answers

<p>Capitalize the costs as an asset if the criteria in IFRS 15 are met, even though the asset is used across multiple contracts. (D)</p> Signup and view all the answers

<p>Assess whether an impairment loss should be recognized, based on the expected consideration to be received. (B)</p> Signup and view all the answers

<p>Expense the costs immediately when they are incurred. (D)</p> Signup and view all the answers

<p>A reconciliation of the carrying amount at the beginning and the end of the period. (A)</p> Signup and view all the answers

<p>The remaining unamortized amount should be amortized over the extended period, accounted for as a change in accounting estimate under IAS 8. (C)</p> Signup and view all the answers

<p>Direct material costs, direct labour costs, and allocation of overheads that relate directly to the contract. (A)</p> Signup and view all the answers

<p>Amortize the remaining unamortized amount immediately and account for it as a change in accounting estimate under IAS 8. (A)</p> Signup and view all the answers

An international financial reporting standard for revenue recognition.

The accounting principle that outlines how and when revenue is recorded.

An agreement that outlines rights and obligations between an entity and its customers.

The potential ability of an entity to generate revenue from its operations.

A measure that shows how well an entity is performing, typically through revenue.

Regulations that mandate the revealing of financial information to stakeholders.

Expected income from contracts that will be earned in upcoming periods.

A structured approach to ensure consistent revenue recognition across industries.

To provide a single framework for revenue recognition across entities.

Applies to most contracts with customers, excluding some specific types.

The amount the entity expects to receive for transferring goods/services.

Promises in a contract to transfer goods or services to a customer.

Customer's ability to return products within a specified period.

Changes to the original terms of a contract that may affect revenue.

IFRS 15 applies to sales of non-financial assets not part of usual activities.

Guidance on how to treat multiple contracts as one for revenue recognition.

Determines whether revenue is recognized as a principal (seller) or agent (broker).

Costs directly related to obtaining or fulfilling a contract with a customer.

Dividing the total transaction price among performance obligations.

Adjustments to the transaction price due to various factors, like returns.

IFRS 15 provides detailed instructions for various contract types.

Recognize revenue to reflect transfer of promised goods/services and expected consideration.

A framework for recognizing revenue under IFRS 15 involving five specific steps.

Identify the contract(s) with the customer.

Identify the performance obligations in the contract.

Determine the transaction price of the contract.

Allocate the transaction price to the performance obligations.

Recognize revenue when the entity satisfies a performance obligation.

Entities must allocate total contract price between handset and monthly plan under IFRS 15.

Process of distributing the transaction price among distinct goods/services.

Requirements under IFRS 15 for recognizing revenue from long-term contracts.

CRM systems help manage and automate revenue recognition processes.

IFRS 15 provides more detailed guidance than the previous IAS 18 standard.

IFRS 15 can alter when revenue is recognized for various industries.

A contract modification treated as a new agreement.

Items that can be sold separately under a contract.

Changes made to the contract price based on certain conditions.

The original terms and obligations before modification.

Modification treated as a new contract for distinct goods.

Modification is part of existing contract for non-distinct items.

Mix of new and existing contracts for distinct and non-distinct goods.

Recording income from remaining obligations after modification.

When a change does not qualify for separate contract treatment.

The effect of contract modifications on pricing and revenue.

Price reductions based on larger quantities purchased.

When a customer gains ownership of goods.

A framework for recognizing revenue based on specific steps to assess contracts with customers.

The first step where an entity identifies its customers and contracts with them.

A party that contracts with an entity for goods or services in exchange for consideration.

Key characteristics that a contract must have to fall under IFRS 15.

A characteristic indicating that a contract affects future cash flows.

The need for ongoing evaluation of a contract's attributes throughout its term.

A party involved in a contract; this might not always be a customer.

Three conditions under which contracts can be combined: single objective, dependent consideration, single performance obligation.

The treatment of a modified contract as a new contract if certain conditions are met.

The payment or value exchanged in a contract.

The regular goods or services produced by an entity as part of its business operations.

Legal rights and duties created through a contract that can be enforced in a court.

Items that can provide benefit on their own or with other resources.

An agreement to deliver goods or services identified in a contract.

The process of recognizing all obligations in a contract.

The advantage a customer derives from goods or services.

A good or service must be distinct and separable from others.

Two or more goods or services combined if not distinct alone.

A major service that combines various goods or services.

Services that rely heavily on each other to function.

A less prominent promise that could still create an obligation.

Entities might include free items or services as obligations.

A good or service must meet specific criteria to be considered distinct.

Recognizing contract changes as a termination and new contract creation.

International standard for revenue recognition guidance.

The combination of multiple goods and services into a single performance obligation.

When multiple goods or services are bundled together as one commitment in a contract.

Items that are separately identifiable and can be accounted for individually in a contract.

Total expected consideration the entity will receive, excluding third-party amounts.

Consideration that can fluctuate, such as discounts or bonuses based on performance.

A guaranteed amount stated in the contract that does not change.

An entity's process of predicting the potential variances in the transaction price.

An approach to estimating variable consideration based on possible outcomes and their probabilities.

Technique used to evaluate how much of the performance obligation is fulfilled over time.

A contract feature that affects the transaction price due to the timing of payments.

Extra payment linked to achieving specific performance criteria.

Amounts that are given back to the customer, affecting total revenue.

Fees incurred as a result of failing to meet contract terms.

Contracts that involve providing the same service multiple times over an agreed period.

Allocating the transaction price among the performance obligations identified in a contract.

An obligation to return money for expected refunds from returned goods.

Total revenue acknowledged for goods sold before returns are adjusted.

The point when revenue is officially recorded in financial statements.

Likelihood that previously recognized revenue will be returned or adjusted.

Consideration timing that impacts the transaction price due to time value of money.

Modifying the promised amount due to the time value of money in contracts.

When customers pay before receiving goods or services.

Evaluating if financing impact is significant based on terms and time.

Duration between transfer of goods and payment from customers.

Amount customer would pay in cash for immediate goods or services transfer.

Determines expected value as the consideration amount of the most likely outcome.

A downward adjustment of previously recognized revenue.

More likely than not; a term for including uncertain revenue.

The process of predicting amounts within a transaction price.

The significance of a potential downward adjustment relative to total consideration.

Specific promises within contracts to transfer goods/services.

The unpredictability associated with estimating variable consideration.

The payment or value received from customer transactions.

Evaluating the chance a revenue reversal will occur in future.

Updating the transaction price based on changing expectations.

The rate used to discount the nominal amount of promised consideration to the cash selling price.

The accounting record made when revenue is recognized, showing the transfer of assets and associated revenue.

The process of documenting earnings from financing as per IFRS 15 when the contract includes significant financing.

Goods, services, or other forms of payment received instead of cash in a transaction.

It should be measured at fair value or the stand-alone selling price if fair value is not known.

When consideration payable exceeds the fair value of the exchanged good/service, it's recorded as a reduction of transaction price.

A concept where financing aspects of a contract are treated independently from the exchange of goods/services.

Recognized as interest revenue over the duration of a payment period based on implicit interest rates.

The lowering of recognized revenue due to consideration payable or discounts given to customers.

Interest revenue or expense must be presented separately from revenue in financial statements.

When the customer benefits from financing, interest recognized reduces net revenue.

The process of determining the revenue amount expected from a contract, accounting for any reductions like payments to customers.

Contracts that include more than one promise, requiring allocation of the transaction price to each obligation.

The price an entity would sell each distinct good or service for, when sold separately to a customer.

The observable price from sales of the good or service to similar customers, used to establish stand-alone selling price.

The process used when the stand-alone price isn't observable, utilizing other information to represent the price faithfully.

A method to estimate selling price based on market conditions, customer demand, and competitor pricing.

Calculates selling price by forecasting costs of a service and adding a margin to ensure profit.

Estimates selling price by subtracting the sum of observable prices of other goods from total transaction price.

Data that can be directly observed and used to estimate prices consistently across similar situations.

The point at which an entity fulfills its promise to transfer control of goods or services to the customer.

Conditions under which revenue can be recorded, including transfer of control and satisfaction of performance obligations.

Changes in how and when revenue is recognized across different industries due to new standards.

Potential cash inflows or savings from an asset.

Conditions under which performance obligations can be recognized over time.

When customer receives and uses benefits as services are performed.

Customer controls benefits of an asset as it is created or enhanced.

An asset that can be redirected to other customers.

Entitlement to compensation for completed performance.