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

IFRS 15 requires revenue recognition when control of the good or service passes to the customer.

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

Step 1 is to identify the contract, which must meet specific criteria such as commercial substance and collectability.

Question 3

Under IAS 2, inventories should be measured at:

Accepted Answer

The lower of cost and net realisable value

Answer

IAS 2 requires inventories to be carried at the lower of cost and NRV to prevent overstatement.

Question 4

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

Accepted Answer

LIFO (Last-In, First-Out)

Answer

IAS 2 explicitly prohibits the use of LIFO as a cost formula for inventory.

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

IAS 16 requires PPE to be measured at cost, including all directly attributable costs of bringing it to working condition.

Certificate in International Financial Reporting Practice Test

Certificate in International Financial Reporting Practice Test

Certificate in International Financial Reporting Revenue, Inventories, and PPE