Certificate in International Financial Reporting Revenue, Inventories, and PPE

Question 1

Under IFRS 15, revenue is recognised when an entity satisfies a performance obligation by transferring a promised good or service. When is control transferred in a point-in-time recognition?

Accepted Answer

When the customer obtains control of the asset

Answer

When the invoice is issued

Answer

When cash is received

Answer

When the contract is signed

Question 2

Under IFRS 15, what is the first step in the five-step revenue recognition model?

Accepted Answer

Identify the contract with the customer

Answer

Identify the performance obligations

Answer

Determine the transaction price

Answer

Allocate the transaction price

Question 3

Under IAS 2, inventories should be measured at:

Accepted Answer

The lower of cost and net realisable value

Answer

Historical cost only

Answer

Fair value

Answer

Replacement cost

Question 4

Under IAS 2, which cost formula is NOT permitted for measuring inventory cost?

Accepted Answer

LIFO (Last-In, First-Out)

Answer

FIFO (First-In, First-Out)

Answer

Weighted average cost

Answer

Specific identification

Question 5

Under IAS 16, which costs are included in the initial measurement of property, plant and equipment?

Accepted Answer

Purchase price plus directly attributable costs to bring the asset to its intended use

Answer

Purchase price only

Answer

Purchase price plus all overhead costs

Answer

Fair value at acquisition date

Question 6

Under IAS 16, which model allows an entity to carry PPE at fair value less subsequent depreciation and impairment?

Accepted Answer

Revaluation model

Answer

Cost model

Answer

Fair value through profit or loss model

Answer

Impairment-only model