Revenue, Inventories, and PPE Flashcards

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

Answer: Highly probable a significant revenue reversal will not occur

IFRS 15 uses the constraint that variable amounts are included only when a reversal is highly improbable.

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

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

The excess depreciation on the revalued amount is transferred from OCI/revaluation surplus to retained earnings.

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

Answer: Estimated selling price less estimated costs of completion and selling costs

NRV is the expected selling price in ordinary business less costs to complete and sell the item.

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

Answer: Cost or revalued amount less residual value

The depreciable amount is the cost (or revalued amount) minus the estimated residual value.

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

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

Over-time recognition applies when one of three criteria is met, including simultaneous consumption of benefits.

Under IAS 2, borrowing costs are generally:

Answer: Excluded from inventory cost and expensed

IAS 2 generally excludes borrowing costs from inventory cost; they are expensed as incurred.