Chapter 6

Question 1

What does IFRS 15 define revenue as?

Answer 1

Income arising in the course of an entitys ordinary activies

Question 2

What is not included in revenue?

Answer 2

Proceeds from sale of non current assets
Sales tax and other similar taxes
Other amounts collected on behalf of others

Question 3

What is the five step approach to recognise revenue?

Answer 3

1. Identify contract
2. Identify performance obligations
3. Determine transaction price
4. Allocate price to performance obligation
5. Recognise revenue when obligation satisfied

Question 4

What is the nature of the obligation that an entity must decide it is?

Answer 4

Provide services or goods itself
Arrange another party to provide goods or services

Question 5

What criteria must a contract meet to account revenue?

Answer 5

Parties have approved
Each parties rights can be identified
Payment terms can be identified
Contract has commercial substance
Probable that entity will be paid

Question 6

When determining transaction price what must be considered?

Answer 6

Variable consideration
Significant financing components
Non-cash consideration
Consideration payable to customer

Question 7

How can the existence of financing element be identified?

Answer 7

Difference between amount paid and cash selling price
Extended time period between transfer of goods or services and payment date

Question 8

When is revenue recognised?

Answer 8

When the entity satisfies a performance obligation by transferring a promised good or service to a customer

Question 9

What are the indicators of control?

Answer 9

Entity has present right to payment for the asset
Customer has legal title
Entity transferred physical possession