№1
Repro has prepared its draft financial statements for the year ended 30 September 20X4. It has included
the following transactions in revenue at the amounts stated below.
Which of these has been correctly included in revenue according to IFRS 15 Revenue
from Contracts with Customers?
A Agency sales of $250,000 on which Repro is entitled to a commission of 10%.
B Sale proceeds of $20,000 for motor vehicles which were no longer required by Repro.
C Sales of $150,000 on 30 September 20X4. The amount invoiced to and received from the customer
was $180,000, which includes $30,000 for ongoing servicing work to be done by Repro over the next
two years.
D Sales of $200,000 on 1 October 20X3 to an established customer who (with the agreement of Repro)
will make full payment on 30 September 20X5. Repro has a cost of capital of 10%.
№2
Yling entered into a contract to construct an asset for a customer on 1 January 20X4 which is expected
to last 24 months. The agreed price for the contract is $5 million. At 30 September 20X4, the costs
incurred on the contract were $1.6 million and the estimated remaining costs to complete were $2.4
million. On 20 September 20X4, Yling received a payment from the customer of $1.8 million which was
equal to the full amount billed. Yling calculates contract progress using the output method, on the basis
of amount billed compared to the contract price.
What amount would be reported as a contract asset in Yling’s statement of financial
position as at 30 September 20X4?
5,000-(1,600+2,400)=1,000
1,000*1,800/5,000=0.36
0.36+1,600-1,800=0.16
$_160 000___
№3
CN started a three-year contract to build a new university campus on 1 April 20X4. The contract had a
fixed price of $90 million. CN will satisfy the performance obligation over time. CN incurred costs to 31
March 20X5 of $77 million and estimated that a further $33 million would need to be spent to complete
the contract.
CN measures the progress of contracts using work completed compared to contract price.
At 31 March 20X5, a surveyor valued the work completed to date at $63 million.
Select the correct amounts to be shown in revenue and cost of sales in the statement of
profit or loss for the year ended 31 March 20X5?
Revenue Cost of sales
Loss = 90 – (77+33) = -20
Progress = 63/90 = 70%
Revenue = 70%*90 = 63
CoGS = -20 – 63 = -83
A) $63 million $77 million
B) $57 million $83 million
№4
Locke sells machines, and also offers installation and technical support services. The individual selling
prices of each product are shown below.
Sale price of goods $75
Installation $30
One year service $45
Locke sold a machine on 1 May 20X1, charging a reduced price of $100, including installation and one
year’s service.
Locke only offers discounts when customers purchase a package of products together.
According to IFRS 15 Revenue from Contracts with Customers, how much should Locke
record in revenue for the year ended 31 December 20X1? Workings should be rounded to
the nearest $.
Total SP = 75+30+45 = 150
Goods = 75*100/150 = 50
Installation = 30*100/150 = 20
1-year service = 45*100/150 = 30
Service recognized = 30*8/12 = 20 (01.05.20X1-31.12.20X1)
Revenue = 50+20+20 = 90
$____90________
№5
Place the following steps for recognising revenue in order in accordance with IFRS 15
Revenue from Contracts with Customers.
Identify the separate performance obligations within a contract
Identify the contract
Determine the transaction price
Recognise revenue when (or as) a performance obligation is satisfied
Allocate the transaction price to the performance obligations in the contract
№6
BL entered into a contract with a customer on 1 November 20X4. The contract was scheduled to run for
two years and has a sales value of $40 million. BL will satisfy the performance obligations over time.
At 31 October 20X5, the following details were obtained from BL’s records:
$m
Costs incurred to date
16
Estimated costs to completion
18
Progress at 31 October 20X5
45%
Applying IFRS 15 Revenue from Contracts with Customers, how much revenue and cost
of sales should BL recognise in its statement of profit or loss for the year ended 31
October 20X5?
Profit = 40 – (16+18) = 6
Profit = 6*45% = 2,7
CoGS = (16+18)*45% = 15,3
№7
Malik is a construction business, recognising progress based on work certified as a
proportion of total contract value. Malik will satisfy the performance obligation over time.
The following information relates to one of its long-term contracts as at 31 May 20X4,
Malik’s year-end.
$
Contract price
200,000
Costs incurred to date
130,000
Estimated cost to complete
20,000
Invoiced to customer
120,000
Work certified to date
180,000
In the year to 31 May 20X3 Malik had recognised revenue of $60,000 and profit of $15,000 in respect of
this contract.
What profit should appear in Malik’s statement of profit or loss as at 31 May 20X4 in
respect of this contract?
P/L = 200 – (130+20) = 50
Progress = 180/200 = 0,9
Profit to be recognized = 50*0,9 = 45
Profit in 20X4 = 45 – 15 = 30
$___________
№8
Which of the following items has correctly been included in Hatton’s revenue for the year
to 31 December 20X1?
A) $2 million in relation to a fee negotiated for an advertising contract for Rees, one of Hatton’s clients.
Hatton acted as an agent during the deal and is entitled to 10% commission.
B) $500,000 relating to a sale of specialized equipment on 31 December 20X1. The full sales value was
$700,000 but $200,000 relates to servicing that Hatton will provide over the next 2 years, so Hatton has
not included that in revenue this year.
C) $800,000 relating to a sale of some surplus land owned by Hatton.
D) $1 million in relation to a sale to a new customer on 31 December 20X1. Control passed to the
customer on 31 December 20X1. The $1 million is payable on 31 December 20X3. Interest rates are 10%.
№9
Sugar has entered into a long-term contract to build an asset for a customer, Hewer. Sugar will satisfy
the performance obligation over time and has measured the progress towards satisfying the
performance obligation at 45% at the year end.
The price of the contract is $8 million. Sugar has spent $4.5 million to date, but the estimated costs to
complete are $5.5 million. To date, Hewer has paid Sugar $3 million.
What is the net liability that should be recorded in Sugar’s statement of financial
position?
8 – (4,5+5,5) = -2
8*45% = 3,6
CoGS = (4,5+5,5)*45% = 4,5
Net liability = 4,5-2-3 = 0,5
$_______________ ,000
№10
Hindberg is a car retailer. On 1 April 20X4, Hindberg sold a car to Latterly on the following terms:
The selling price of the car was $25,300. Latterly paid $12,650 (half of the cost) on 1 April 20X4 and will
pay the remaining $12,650 on 31 March 20X6 (two years after the sale).
Latterly can obtain finance at 10% per annum.
What is the total amount which Hindberg should credit to profit or loss in respect of this
transaction in the year ended 31 March 20X5?