Ifrs 15 Flashcards
What is the objective of IFRS 15 Revenue from Contracts with Customers?
To establish the principles for reporting useful information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer.
This standard aims to enhance financial statement transparency for users.
What are the five steps in the IFRS 15 model?
- Identify the Contract with Customers
- Identify the Performance Obligation(s) in the Contract
- Determine the Transaction Price
- Allocate the Transaction Price to each Performance Obligation
- Recognize Revenue when (or as) Performance Obligations are satisfied
These steps provide a structured approach to revenue recognition.
What is the first step in the IFRS 15 model?
Identify the Contract with Customers.
This can be oral or written and must be enforceable.
What is the second step in the IFRS 15 model?
Identify the Performance Obligation(s) in the Contract.
Performance obligations are promises to transfer goods or services to a customer.
What is the third step in the IFRS 15 model?
Determine the Transaction Price.
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services.
What is the fourth step in the IFRS 15 model?
Allocate the Transaction Price to each Performance Obligation.
This allocation is based on the relative standalone selling prices of the goods or services.
What is the fifth step in the IFRS 15 model?
Recognize Revenue when (or as) Performance Obligations are satisfied.
Revenue recognition occurs as control of the goods or services is transferred to the customer.
What is the objective of IFRS 15 Revenue from Contracts with Customers?
To establish the principles for reporting useful information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer.
This standard aims to enhance financial statement transparency for users.
What are the five steps in the IFRS 15 model?
- Identify the Contract with Customers
- Identify the Performance Obligation(s) in the Contract
- Determine the Transaction Price
- Allocate the Transaction Price to each Performance Obligation
- Recognize Revenue when (or as) Performance Obligations are satisfied
These steps provide a structured approach to revenue recognition.
What is the first step in the IFRS 15 model?
Identify the Contract with Customers.
This can be oral or written and must be enforceable.
What is the second step in the IFRS 15 model?
Identify the Performance Obligation(s) in the Contract.
Performance obligations are promises to transfer goods or services to a customer.
What is the third step in the IFRS 15 model?
Determine the Transaction Price.
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services.
What is the fourth step in the IFRS 15 model?
Allocate the Transaction Price to each Performance Obligation.
This allocation is based on the relative standalone selling prices of the goods or services.
What is the fifth step in the IFRS 15 model?
Recognize Revenue when (or as) Performance Obligations are satisfied.
Revenue recognition occurs as control of the goods or services is transferred to the customer.
What is a Contract Liability?
Consideration received in advance from the customer or is due from the customer for which goods & services are to be provided in future to the customer.
This is a key concept in IFRS-15.
What defines a Contract Receivable?
Unconditional right to consideration from the customer whether goods & services are provided or not.
This concept is also outlined in IFRS-15.
What is a Contract Asset?
Conditional right to consideration from the customer for which goods & services are already provided.
The definition aligns with the guidelines of IFRS-15.
Fill in the blank: A Contract Liability is consideration received in advance from the customer or is _______ for which goods & services are to be provided in future to the customer.
due from the customer
What is a Contract Liability?
Consideration received in advance from the customer or is due from the customer for which goods & services are to be provided in future to the customer.
This is a key concept in IFRS-15.
What defines a Contract Receivable?
Unconditional right to consideration from the customer whether goods & services are provided or not.
This concept is also outlined in IFRS-15.
What is a Contract Asset?
Conditional right to consideration from the customer for which goods & services are already provided.
The definition aligns with the guidelines of IFRS-15.
Fill in the blank: A Contract Liability is consideration received in advance from the customer or is _______ for which goods & services are to be provided in future to the customer.
due from the customer
What costs can be recognized as an asset under IFRS-15 for obtaining a contract?
Only incremental costs that are expected to be recovered.
Define incremental costs in the context of contract acquisition.
Costs incurred in obtaining a contract that would not have been incurred if the contract is not obtained.
Give examples of incremental costs related to obtaining a contract.
- Sales commission
- Advertisement
- Sales incentive/commission
- Marketing
What happens to costs incurred regardless of contract acquisition under IFRS-15?
They are recognized as an expense when incurred.
What are some examples of costs that would be recognized as expenses when incurred?
- Costs of preparing proposals
- Costs of submitting bids for a contract
What is the treatment of sunk costs in contract acquisition?
Sunk costs are not recognized as assets and are expensed out.
How should contract costs be amortized according to IFRS-15?
On a systematic basis that reflects the transfer of goods or services to the customer.
Fill in the blank: Incremental costs of obtaining a contract are costs that would not have been incurred if the contract was _______.
not obtained
True or False: All costs related to obtaining a contract can be capitalized as assets.
False
