Magpantay, Katherine M.

ACCT314A

BSACCTY2- BACC2A

IFRS 15 Quiz:

True/False:

1. The new revenue recognition standard adopted a liability approach as the basis for revenue
recognition. FALSE
2. Revenue is recognized in the accounting period when the performance obligation is satisfied
TRUE
3. The first step in the revenue recognition process is to identify the separate performance
obligations in the contract. FALSE
4. Revenue from a contract with a customer cannot be recognized until a contract exists. TRUE
5. If the performance obligation is not highly dependent on or interrelated with, other promises in the
contract, then each performance obligation should be accounted for separately. TRUE
6. A performance obligation is a written guarantee in a contract to provide a product or service to a
customer. FALSE
7. Companies always use the expected value, a probability-weighted amount, to estimate variable
consideration. FALSE
8. When a sales transaction involves a significant financing component, the fair value is determined
either by measuring the consideration received or by discounting the payment using an imputed
interest rate. TRUE
9. Companies rarely have to allocate the transaction price to more than one performance obligation
in a contract. FALSE
10. When a company sells a bundle of goods at a discount, the discount should be allocated to the
product that caused the discount and not to the entire bundle. TRUE
11. A company recognizes revenue from a performance obligation over time by measuring the
progress toward completion. TRUE
12. A company can only satisfy its performance obligations at a point in time. FALSE
13. When a company sells a product but gives the buyer the right to return it, revenue should not be
recognized until the sale is collected. FALSE
14. A contract liability is a company’s obligation to transfer goods or services to a customer for which
the company has received consideration from the customer. TRUE
15. The most popular input measure used to determine the progress toward completion in long-term
contracts is the cost-to-cost basis. TRUE