Recognition

Question 1

Financial asset and liability

Answer 1

When it becomes party to the contractual provision of the instrument.

Question 2

PPE

Answer 2

Probable future economic benefits will flow to the entity.
Cost can be measured reliably.

Question 3

Provision

Answer 3

Present obligation as a result of past events: the obligation can be legal or constructive
Probable outflow of resource
Reliable estimate can be made

Question 4

Restructuring

Answer 4

Detailed formal plan for restructuring
Plan has been communicated

Question 5

Intangible assets

Answer 5

Identifiable
Controlled by the entity
Generate future economic benefits
Cost can be measured reliably

Question 6

Nca held for sale

Answer 6

1.Available for immediate sale
2.Sale must be highly probable (mgt committed to a plan to sell, active programme to locate buyer, asset is actively marketed)
3.sale is expected to complete within 12 months.

Question 7

Revenue

Answer 7

Ifrs 15 revenue from contracts with customers says that a contract with a customer should only be accounted for if:
• the parties have approved the contract
• rights and obligations can be identified from the contract
• payment terms can be identified
• the contract has commercial substance
• it is probable that the entity will collect the consideration they are entitled to

Question 8

Short term lease

Answer 8

1. 12 month lease term with no purchase option
2. Asset has a low value

Question 9

Govt grants

Answer 9

If it is probable that
1. Conditions for receipt have been complied with
2. Reasonable assurance that the grant will be received.

Question 10

Hedge accounting

Answer 10

Under IFRS 9, hedge accounting can only be applied if it meets following criteria
1. There is a hedging relationship
2. At the inception of the hedge, there must be formal documentation identifying the hedged item & hedged instrument.
3. Hedging relationship meets all effectiveness requirements

Question 11

Provision

Answer 11

1. Present obligation as a result of past events
2. Reliable estimate
3. Probable outflow

Question 12

Revenue recognition over time( in stages) criteria

Answer 12

If one of the following is met:
1. Customer simultaneously receives and consumes benefits
2. Customer has the control throughout the process
3. No alternative use for entity
4. Enforceable right to payment for performance completed to date.