Revenue, Inventories, and PPE Flashcards

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?

Answer: When the customer obtains control of the asset

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

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

Answer: Identify the contract with the customer

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

Under IAS 2, inventories should be measured at:

Answer: The lower of cost and net realisable value

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

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

Answer: LIFO (Last-In, First-Out)

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

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

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

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

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

Answer: Revaluation model

The revaluation model under IAS 16 allows assets to be carried at revalued amounts less accumulated depreciation.