IFRS Contract Costs Quiz
30 Questions
3 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What types of obligations are recognised as provisions in an entity's statement of financial position?

  • Those arising from future events
  • Those existing independently of future actions (correct)
  • Those dependent on future business operations
  • Those related to potential future liabilities

Which of the following is an example of an obligation that would lead to a provision being recognized?

  • Penalties for unlawful environmental damage (correct)
  • Expenditure for future operational requirements
  • Paying employee salaries in the next reporting period
  • Investing in a new product line

Why might an entity not recognize a provision for future expenditure, even if it intends or needs to carry out that expenditure?

  • The entity has sufficient funds to cover the expenditure
  • The expenditure is essential for future growth
  • The entity can avoid the expenditure by changing its future actions (correct)
  • The expenditure is related to regulatory compliance

What is a key characteristic of an obligation?

<p>It is always owed to another party (D)</p> Signup and view all the answers

Why is fitting smoke filters in a certain factory not recognized as a provision according to the text?

<p>The factory may avoid this expenditure by changing its method of operation (A)</p> Signup and view all the answers

Which statement best describes the recognition of liabilities in an entity's statement of financial position?

<p>Only liabilities arising from past events are recognized as provisions (B)</p> Signup and view all the answers

What does an entity need to disclose concerning future events, as per paragraph 48?

<p>Major assumptions made (B)</p> Signup and view all the answers

When must an entity disclose information about contingent liabilities?

<p>If the possibility of any outflow in settlement is remote (A)</p> Signup and view all the answers

What should an entity provide when disclosing each class of contingent liability?

<p>Brief description, financial effect, and uncertainties (A)</p> Signup and view all the answers

How should an entity determine which provisions or contingent liabilities may be aggregated to form a class?

<p>By considering the similarity in nature of the items (B)</p> Signup and view all the answers

What is required for an entity to disclose concerning expected reimbursements?

<p>Amount of any asset recognized for expected reimbursement (C)</p> Signup and view all the answers

Why is it important for an entity to disclose uncertainties related to contingent liabilities?

<p>To provide clarity on potential outflows (B)</p> Signup and view all the answers

When is disclosure required under IAS 10 Events after the Reporting Period for a restructuring plan?

<p>If the entity starts implementing the plan after the reporting period and it is material. (A)</p> Signup and view all the answers

When can a constructive obligation to restructure be created?

<p>By earlier events combined with a management decision. (D)</p> Signup and view all the answers

In what situation does an entity have a constructive obligation to restructure?

<p>Once board approval has been obtained and communicated for restructuring. (C)</p> Signup and view all the answers

What is necessary for a constructive obligation to restructure to exist?

<p>Conditions laid out in paragraph 72 of IAS 10. (C)</p> Signup and view all the answers

What role do employee representatives play in the restructuring process?

<p>Board approval is subject to employee representatives' agreement. (A)</p> Signup and view all the answers

How does IAS 10 Events after the Reporting Period impact disclosure of restructuring plans?

<p>It requires disclosure if non-disclosure could influence financial statement users' decisions. (A)</p> Signup and view all the answers

When should a provision be recognized?

<p>When there is a past event and a present obligation (B)</p> Signup and view all the answers

In what situation should no provision be recognized?

<p>When all conditions for recognition are not met (A)</p> Signup and view all the answers

How is a present obligation determined in cases where it is not clear?

<p>By considering evidence and determining if it is more likely than not (A)</p> Signup and view all the answers

In what cases may it be disputed whether certain events result in a present obligation?

<p>In rare cases, for example, in a lawsuit (C)</p> Signup and view all the answers

What does an entity consider when determining if a present obligation exists at the end of the reporting period?

<p>All available evidence including expert opinions (C)</p> Signup and view all the answers

What happens if there is uncertainty about whether a past event has given rise to a present obligation?

<p>The entity does not recognize a provision until certainty is achieved (A)</p> Signup and view all the answers

What costs relate directly to a contract according to the text?

<p>Incremental costs like direct labour and materials (A)</p> Signup and view all the answers

When does an entity recognize any impairment loss on assets used in fulfilling a contract?

<p>Before establishing a separate provision for an onerous contract (A)</p> Signup and view all the answers

What types of events are examples of restructuring according to the text?

<p>Sale or termination of a line of business (D)</p> Signup and view all the answers

When is a provision for restructuring costs recognized?

<p>Only when general recognition criteria for provisions are met (C)</p> Signup and view all the answers

Which of the following would not be considered a cost directly related to a contract?

<p>Allocated marketing costs for the entire business (C)</p> Signup and view all the answers

What would trigger the recognition of an impairment loss on assets used in fulfilling a contract?

<p>Occurrence of an impairment loss (D)</p> Signup and view all the answers

More Like This

IFRS 17 保险合同测量
21 questions

IFRS 17 保险合同测量

FastestGrowingGuitar avatar
FastestGrowingGuitar
IFRS 9 Financial Instruments Quiz
42 questions
Use Quizgecko on...
Browser
Browser