Ch 2: Revenue Recognition Flashcards
(11 cards)
What are the four parts of the CPA Canada Handbook?
Part I: IFRS; Part II: Accounting Standards for Private Enterprises (ASPE); Part III: Accounting Standards for Not-for-Profit Organizations; Part IV: Accounting Standards for Pension Plans.
Does understanding an entity’s business model help in identifying revenue recognition and asset issues?
Yes; it provides context for how revenue is earned and assets are utilized, aiding in accurate financial reporting.
Under IFRS 15, when determining performance obligations, is it sufficient for only one criterion to be met?
No; both criteria must be met: the good or service must be capable of being distinct and distinct within the context of the contract.
Must all performance obligations in a contract be recognized in the same manner under IFRS 15?
No; each performance obligation is evaluated individually to determine if it should be recognized over time or at a point in time.
Do the qualitative characteristics of useful financial information apply to sustainability-related financial information?
Yes; characteristics like relevance and faithful representation apply to all general-purpose financial reporting, including sustainability disclosures.
Does recognition in financial statements refer to disclosure in the notes?
No; recognition involves recording items on the face of the financial statements, not merely disclosing them in the notes.
Does IFRS 18 introduce new categories and subtotals in the statement of profit or loss?
Yes; it introduces categories such as operating, investing, and financing, along with subtotals like operating profit and profit before financing and income taxes.
Should transactions be recorded based on their legal form or economic substance?
Transactions should be recorded based on their economic substance to ensure faithful representation in financial statements.
Is determining whether to lend to a company a primary objective supported by the IFRS Conceptual Framework?
Yes; providing information useful for making decisions about providing resources to the entity is a primary objective.
How do ASPE and IFRS differ in their revenue recognition models?
ASPE follows a completion-based model, recognizing revenue when the earnings process is complete; IFRS follows an accrual-based model, recognizing revenue as performance obligations are satisfied.
What is the objective of IFRS 15?
To establish principles for reporting useful information about the nature, amount, timing, and uncertainty of revenue and cash flows from contracts with customers.
