Certificate in International Financial Reporting Revenue, Inventories, and PPE 2

Question 1

Under IFRS 15, a variable consideration (e.g., performance bonus) should be included in the transaction price only to the extent that it is:

Accepted Answer

Highly probable a significant revenue reversal will not occur

Answer

Certain to be received

Answer

Approved by the customer in writing

Answer

Included in the signed contract

Question 2

Under IAS 16, how is a revaluation surplus treated when an asset is subsequently depreciated?

Accepted Answer

Transferred from revaluation surplus to retained earnings over the asset's useful life

Answer

Recognised in profit or loss

Answer

Kept in revaluation surplus permanently

Answer

Written off immediately against profit or loss

Question 3

Net realisable value (NRV) under IAS 2 is defined as:

Accepted Answer

Estimated selling price less estimated costs of completion and selling costs

Answer

Current replacement cost

Answer

Fair value less costs to sell

Answer

Carrying amount of inventory

Question 4

Under IAS 16, what is the depreciable amount of an asset?

Accepted Answer

Cost or revalued amount less residual value

Answer

Cost only

Answer

Fair value at the reporting date

Answer

Cost less accumulated impairment

Question 5

Under IFRS 15, when should revenue be recognised over time rather than at a point in time?

Accepted Answer

When the customer simultaneously receives and consumes the benefits as the entity performs

Answer

When the contract is long-term

Answer

When payment is received in instalments

Answer

When the entity retains significant risks

Question 6

Under IAS 2, borrowing costs are generally:

Accepted Answer

Excluded from inventory cost and expensed

Answer

Capitalised into inventory cost

Answer

Offset against revenue

Answer

Treated as part of NRV adjustment