Reference no: EM132704597

Problem 1: Which of the following is NOT a condition that needs to be satisfied prior to recognising revenue from the rendering of services using the 'percentage of completion' method?

a) The amount of revenue can be measured reliably.

b) The stage of completion of the transaction can be measured reliably.

c) The costs of the transaction (including future costs) can be measured reliably.

d) The contract is non-cancellable.

Problem 2: Which of the following is NOT an example of an entity retaining significant risks and rewards of ownership?

a) The entity retains an obligation for unsatisfactory performance not covered by normal warranty provisions.

b) The receipt of revenue from a particular sale is contingent on the buyer reselling the goods.

c) The goods are shipped subject to installation, and the installation is a significant part of the contract that has not yet been completed by the entity.

d) The buyer has the right to rescind the purchase for a reason specified in the sales contract. The entity is confident that this option will not be exercised.

Problem 3: An entity shall recognise revenue from a contract when:

a) the entity has satisfied the performance obligation.

b) the customer has placed an order with the entity

c) the customer obtains control of the goods and service.

d) Answer a) and c).