Step change

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. IFRS 15 replaces several standards and interpretations. Which of the following standards and interpretations is not replaced by IFRS 15?

  2. The definition of what constitutes a contract for the purpose of applying IFRS 15 is critical. What is the definition of a contract based upon?

  3. A contract exists when an agreement between two or more parties creates enforceable rights and obligations between those parties. When applying IFRS 15, which of the following statements as regards the contractual obligations is not true?

  4. IFRS 15 specifies the criteria that must be met before an entity can apply the revenue recognition model to that contract. Which of the following statements is true about the criteria that must be met before application of IFRS 15?

  5. IFRS 15 states that it is essential that the rights and the payment terms of each party can be identified regarding the goods or services to be transferred. Why is it essential for the rights and payment terms of each party to be identified?

  6. The criteria regarding the revenue recognition model have been derived from previous revenue recognition and other standards. If some or all of these criteria are not met, then it is unlikely that the contract establishes enforceable rights and obligations. Which of the following criteria is not set out in IFRS 15 regarding the validity of the contract?

  7. There may be cases where the contract does not meet the criteria for recognition as a contract in IFRS 15. How should the above contracts be dealt with by the entity?

  8. The standard defines the term customer as: a party that has contracted with an entity to obtain goods or services that are an output of the entity’s ordinary activities in exchange for consideration. What is the purpose of this definition?

  9. In the case of the transfer of non-financial assets that are not an output of the ordinary activities of an entity, it is now required that an entity applies IFRS 15 in order to determine when to de-recognise the asset and to determine the gain or loss on de-recognition. Why has this requirement been introduced into IFRS 15?

  10. Some contracts with customers will fall partially under IFRS 15 and partially under other Standards. How are these contracts dealt with under IFRS 15?