Ch 7 - quiz Flashcards
Revenue is generally recognized when cash is received. Receiving cash from customers is a necessary and sufficient condition for
revenue recognition. (according to IFRS 15)
True or False
False
In determining the transaction price, only fixed price elements may be taken into account. Variable amounts can only be recognized after the relevant payments have been made. (according to IFRS 15)
True or False
False
A performance obligation includes a promise in a contract with a customer to transfer a good or service that is distinct. (according to IFRS 15)
True or False
True
The transaction price should be allocated to each performance obligation on a relative cost basis. (according to IFRS 15)
True or False
False
When recognising revenue over time, the entity needs to measure the progress towards complete satisfaction of the respective performance obligation. This requires an output-oriented measure, because input-(cost-) oriented measures are not closely linked to the transfer of
control of goods or services to a customer. (according to IFRS 15)
True or False
False
Which is the main consideration to determine whether a sale has occurred?
A. The economic substance of the transaction
B. Whether title to the goods has passed
C. The provisions of the legal contract
D. Whether the sale is for goods or services
A
Standard mobile contracts commonly include goods and services that may be used together: Which of the following statements is correct?
A. As the handset is given for free, it is not a performance obligation.
B. The whole contract consists of one performance obligation.
C. The contract comprises two separate performance obligations, the transfer of the handset and the provision of the network connection services.
D. As the variable cost for the network service is almost zero, the handset is the main performance obligation.
C
If revenue for 20X1 is understated then …
A. … there are hidden reserves - profit for 20X1 is understated and net assets are overstated.
B. … there are hidden reserves - profit for 20X1 is overstated and net assets are overstated.
C. … there are hidden reserves - profit for 20X1 is understated and net assets are understated.
D. None of the above.
C
