IFRS for SMEs) IFRS for SMEs Revenue and Expenses

Question 1

Under IFRS for SMEs, when should revenue from the sale of goods be recognized?

Accepted Answer

When the entity has transferred the significant risks and rewards of ownership to the buyer

Answer

When cash is received from the customer

Answer

When the sales contract is signed

Answer

At the end of the reporting period

Question 2

How should construction contract revenue be recognized under IFRS for SMEs when the outcome can be reliably estimated?

Accepted Answer

Using the percentage of completion method

Answer

Only when the contract is fully completed

Answer

At the halfway point of the contract

Answer

When the first invoice is issued

Question 3

How are government grants related to assets accounted for under IFRS for SMEs?

Accepted Answer

Recognized in income on a systematic basis over the useful life of the asset

Answer

Recognized immediately as revenue when received

Answer

Recorded as a reduction of the asset's cost

Answer

Not recognized until the grant conditions are fully met

Question 4

Under IFRS for SMEs, how should borrowing costs be treated?

Accepted Answer

Recognized as an expense in the period in which they are incurred

Answer

Capitalized as part of the cost of qualifying assets

Answer

Deferred and amortized over the loan term

Answer

Recognized only when the loan is repaid

Question 5

How should employee benefits such as short-term compensated absences be recognized?

Accepted Answer

As a liability when the employee has rendered service in exchange for the benefit

Answer

Only when the employee takes the absence

Answer

At the beginning of each fiscal year

Answer

When the employee terminates employment

Question 6

What is the simplified approach for share-based payment transactions under IFRS for SMEs?

Accepted Answer

Use observable market prices where available; use directors' best estimate of fair value otherwise

Answer

Always use the Black-Scholes option pricing model

Answer

Recognize share-based payments only when exercised

Answer

No recognition is required under the simplified standard