Reference no: EM132870272

Questions -

Question 1 - On April 15, 2020, SFC Inc. (SFC) consigned 80 units of Product A to HGL Inc. (HGL). Each unit cost SFC $450 to produce, and it cost $1,000 to ship all 80 units to HGL. On December 31, 2020, HGL reported that it had sold 40 units for $800 each, and remitted to SFC the proceeds of sales, less a 15% commission and $850 in delivery costs to customers. What profit on the consigned sales will SFC report for 2020? Assume SFC follows ASPE.

A-$7,350

B-$7,850

C-$13,500

D-$26,350

Question 2 - When accounting for long-term construction contracts under IFRS, which of the following statements is true?

A-Before completion of the project, the net balance of the contract assets and progress billings accounts is reported on the statement of financial position as a current asset or liability.

B-All eligible construction-related costs are credited to the contract assets account.

C-Earned profit is credited to the construction in progress revenue account.

D-Interim billings on the project are debited to the progress billings account.

Question 3 - A company that follows ASPE uses the percentage of completion method to recognize the revenue and costs associated with its construction contracts. The company determines that there will be an increase in expected costs to complete the contract, however, total contract revenue is still expected to exceed total contract costs.

How should it account for an increase in the expected costs to complte a fixed-price construction contract?

A-As an expense immediately

B-Retrospectively, as a prior-period error correction

C-As an asset, provided it is probable that they will be recovered

D-Prospectively, as a change in an accounting estimate

Question 4 - Which of the following is a common method of determining the stage of completion for long-term construction projects?

A-Costs incurred to date/contract price

B- Total estimated project costs/contract price

C- Costs incurred to date/total estimated project costs

D- Contract price/work certified to date

Question 5 - For an entity that follows IFRS, which of the following statements regarding accounting for long-term construction contracts is true?

A-Accounting for a fixed-price construction contract is the same regardless of whether the contract is profitable in all periods, profitable in some periods, or unprofitable in all periods.

B-Current-period revenue is calculated as the percentage complete × contract price -cumulative revenue previously recognized.

C-When total estimated costs of a contract are greater than the contract price, the contract loss is recognized over the term of the contract.

D-Increased contract costs should be accounted for retrospectively