34 Lecture

Under IAS 18, revenue is recognized when: A) it is earned and realized B) it is earned and realizable C) the cash has been received D) it is probable that future economic benefits will flow to the entity, and these benefits can be measured reliably Answer: D

Which of the following is not a type of revenue covered by IAS 18? A) Sale of goods B) Rendering of services C) Royalties D) Investment income Answer: D

When should revenue from the sale of goods be recognized under IAS 18? A) When the goods are delivered B) When the customer pays for the goods C) When the goods are dispatched D) When the goods are produced Answer: A

Which of the following is not a criteria for recognizing revenue under IAS 18? A) The amount of revenue can be measured reliably B) It is probable that economic benefits will flow to the entity C) The entity has legal title to the goods or services D) The risks and rewards of ownership have been transferred to the buyer Answer: C

When should revenue from rendering of services be recognized under IAS 18? A) When the service is completed B) When the customer pays for the service C) When the entity receives an order for the service D) When the entity starts providing the service Answer: A

Which of the following is an example of a contingency that could affect revenue recognition under IAS 18? A) A customer may not pay for the goods or services B) The entity may be unable to deliver the goods or services C) The entity may not be able to measure the revenue reliably D) The entity may not have legal title to the goods or services Answer: A

What is the revenue recognition criteria for use of an entity's resources by others? A) When the resource is made available for use B) When the resource is used C) When the customer pays for the use of the resource D) When the entity receives an order for the use of the resource Answer: B

Which of the following is not a disclosure requirement for revenue recognition under IAS 18? A) The amount of revenue recognized for each product or service B) The timing of revenue recognition for each product or service C) The cost of sales for each product or service D) The nature of the entity's relationship with its customers Answer: C

Which of the following is an example of a situation where revenue cannot be measured reliably under IAS 18? A) A customer has not paid for goods or services B) A dispute arises over the quality of goods or services provided C) The costs of providing goods or services cannot be determined D) The entity has legal title to the goods or services Answer: C

What is the main objective of IAS 18? A) To ensure the proper recognition and measurement of revenue in financial statements B) To provide guidance on the recognition and measurement of liabilities in financial statements C) To provide guidance on the recognition and measurement of assets in financial statements D) To provide guidance on the presentation of financial statements Answer: A

What is the definition of revenue under IAS 18? Answer: According to IAS 18, revenue is defined as the gross inflow of economic benefits arising from the ordinary activities of an entity when those inflows result in an increase in equity, other than increases relating to contributions from equity participants.

How should an entity recognize revenue under IAS 18? Answer: An entity should recognize revenue when it is probable that the economic benefits associated with the transaction will flow to the entity and the amount of revenue can be measured reliably.

What are the two types of revenue under IAS 18? Answer: The two types of revenue under IAS 18 are sale of goods and rendering of services.

How should an entity measure revenue from the sale of goods under IAS 18? Answer: Revenue from the sale of goods should be measured at the fair value of the consideration received or receivable, net of any trade discounts or volume rebates.

How should an entity measure revenue from the rendering of services under IAS 18? Answer: Revenue from the rendering of services should be measured at the fair value of the consideration received or receivable, taking into account any stage of completion of the transaction at the end of the reporting period.

How should an entity account for the return of goods under IAS 18? Answer: An entity should account for the return of goods by reducing revenue and recognizing an expense for the estimated cost of the return.

What is the criteria for recognizing revenue on a long-term construction contract under IAS 18? Answer: Revenue on a long-term construction contract should be recognized based on the stage of completion of the contract, measured by the proportion of costs incurred to date compared to the total estimated costs of the contract.

What is the difference between a principal and an agent in a revenue recognition arrangement under IAS 18? Answer: A principal is the entity that is primarily responsible for providing the goods or services, while an agent facilitates the transaction between the principal and the customer.

How should an entity recognize revenue from the sale of goods with a right of return under IAS 18? Answer: An entity should recognize revenue from the sale of goods with a right of return by estimating the amount of goods that are likely to be returned and reducing revenue accordingly.

How should an entity recognize revenue from the sale of services with a warranty under IAS 18? Answer: An entity should recognize revenue from the sale of services with a warranty by allocating a portion of the transaction price to the warranty and recognizing the revenue over the period of the warranty.