Question bank — IFRS 15 — Revenue from Contracts with Customers
422 questions in FR/EN/ES, scored by the real scoring engine.
Objective, core principle and the five steps12 questions
- Under the core principle of IFRS 15, an entity recognises revenue when it collects the price paid by its customer.True / falseL1
- IFRS 15 aims to provide users of financial statements with useful information about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.True / falseL1
- Which statement best reflects the core principle of IFRS 15?Single choiceL1
- In what order does the five-step teaching approach apply the core principle of IFRS 15?Single choiceL1
- Which of the following are steps of the five-step approach that implements the core principle of IFRS 15?Multiple choiceL1
- As a practical expedient, an entity may apply IFRS 15 to a portfolio of contracts with similar characteristics if it reasonably expects that the effect on its financial statements will not differ materially from applying it contract by contract.True / falseL2
- Lumira, a manufacturer of smoke detectors, enters into thousands of standard contracts with installers every year. It wants to account for these contracts as a portfolio. Under what condition does IFRS 15 permit this?Single choiceL2
- When an entity applies IFRS 15 to a portfolio of contracts, the estimates and assumptions it uses reflect the size and composition of that portfolio.True / falseL2
- Which of the following statements are consistent with the core principle of IFRS 15?Multiple choiceL2
- On 20 December 20X1, Fervane receives full payment from its customer for a machine that it will deliver, and of which the customer will obtain control, on 15 January 20X2. Fervane's reporting date is 31 December. When does it recognise the revenue from this sale?Single choiceL2
- Under IFRS 15, the amount of revenue recognised for a period may differ from the amount collected from customers during that same period.True / falseL1
- Brisol, a telecommunications operator, is considering applying IFRS 15 on a portfolio basis to its mobile subscriptions. Which statements are correct?Multiple choiceL2
Scope and contracts partly within other standards13 questions
- A lease within the scope of IFRS 16 is excluded from the scope of IFRS 15.True / falseL1
- Two fuel distributors that exchange volumes of fuel with each other, in order to better serve their respective customers in different regions, account for this exchange under IFRS 15.True / falseL1
- Orlane, a manufacturer of coffee machines, signs several agreements during the year. Which one is within the scope of IFRS 15?Single choiceL1
- Which of the following contracts are excluded from the scope of IFRS 15?Multiple choiceL1
- Végéa and Montelor University jointly develop a new seed variety; they share the costs, risks and benefits of the project. For Végéa, Montelor is a customer as defined in IFRS 15.True / falseL2
- Kalidor, a contract research laboratory, signs two agreements: (1) with Pharmeo, which pays it a fixed fee to carry out a series of trials and receive all of the results; (2) with Biomont, with which it develops a process sharing the costs, risks and future profits. Which agreement(s) is (are) within the scope of IFRS 15 for Kalidor?Single choiceL2
- Tramex makes a truck available to a customer under a contract that includes a lease component within the scope of IFRS 16, and also provides full maintenance of the vehicle. The contract provides for a single overall price. How should Tramex proceed?Single choiceL2
- Oxalis enters into a contract with a customer of which one component is within IFRS 15 and another is within another standard. It is established (case datum) that this other standard specifies neither how to separate this component nor how to measure it initially. How does Oxalis proceed for the separation and initial measurement?Single choiceL3
- A contract is partly within IFRS 15 and partly within another standard that specifies how to separate and measure the component it governs. Which statements are correct?Multiple choiceL2
- Rubane sells standard maintenance contracts to similar customers, in similar circumstances. It may apply an IFRS 15 practical expedient to some of these contracts and not to others, on a case-by-case basis.True / falseL2
- Immovia, whose ordinary activities include leasing warehouses, pays a commission to an intermediary to obtain the signing of a lease within the scope of IFRS 16. Do the IFRS 15 requirements on incremental costs of obtaining a contract apply to this commission?Single choiceL2
- Valtech enters into an overall contract of 100,000 with a customer for making an industrial printer available (a lease component within the scope of IFRS 16) and for an operator training service. Applying the requirements of IFRS 16, the amount attributed to the lease component is 60,000 (case datum). What amount is the transaction price to be accounted for under IFRS 15?Single choiceL3
- Datavia, a software publisher, signs with Merko: (1) a contract under which Merko pays a fixed price to obtain a custom-developed invoicing module that it alone will use; (2) a separate agreement under which the two companies jointly develop a shared platform, sharing the costs, risks and future revenues. How does Datavia analyse these agreements with regard to the scope of IFRS 15?Single choiceL2
Defined terms12 questions
- For the purposes of IFRS 15, a contract is an agreement between two or more parties that creates enforceable rights and obligations.True / falseL1
- A contract asset is a right to consideration whose payment is due solely on the passage of time.True / falseL1
- According to Appendix A of IFRS 15, what is a performance obligation?Single choiceL1
- Ambrel sells a set of furniture to a customer. The invoice amounts to 12,000, including 2,000 of sales tax that Ambrel collects on behalf of the State (case datum). What is the transaction price?Single choiceL1
- How does Appendix A of IFRS 15 define the stand-alone selling price of a good or service?Single choiceL1
- Which of the following statements about income and revenue (Appendix A of IFRS 15) are correct?Multiple choiceL1
- At 31 December 20X1, Néroli has issued an invoice that is due for a service it will only perform in 20X2; the customer has not yet paid. Néroli presents a contract liability at that date.True / falseL2
- Natéo manufactures and sells bicycles. Which of the following parties is a customer of Natéo as defined in IFRS 15?Single choiceL2
- In which of the following situations does the entity hold a contract asset rather than a receivable?Multiple choiceL2
- During 20X1, Corvalis receives 500,000 from its shareholders in a capital increase, and makes 300,000 of sales of goods arising from its ordinary activities, of which the customers have obtained control. What amount is revenue?Single choiceL2
- The transaction price is always equal to the price stated in the contract signed with the customer.True / falseL2
- On 10 November 20X1, Pélagie delivers pumps to a customer, which obtains control of them, and issues an invoice of 30,000 payable within 60 days. No other condition is attached to payment. What item does Pélagie present for this right at 30 November 20X1?Single choiceL2
Identifying the contract17 questions
- For a contract with a customer to exist under IFRS 15, it must necessarily be in writing.True / falseL1
- A contract with a customer is accounted for under IFRS 15 only if all the criteria set by the standard (approval and commitment of the parties, identifiable rights, identifiable payment terms, commercial substance, probable collection) are met at the same time.True / falseL1
- Which of the following are among the criteria that an arrangement with a customer must meet to be accounted for as a contract under IFRS 15?Multiple choiceL1
- To assess whether it is probable that it will collect the consideration to which it will be entitled, what does the entity consider under IFRS 15?Single choiceL1
- On 1 March 20X1, Nordex and a customer sign an agreement for the supply of sensors. At that date, no sensor has been delivered and no amount has been paid or is due. The contract allows each party to terminate it at any time before the first delivery, without compensating the other. Is there a contract under IFRS 15 at 1 March 20X1?Single choiceL2
- For a contract with no fixed duration or that renews automatically, the entity applies IFRS 15 to the contractual period in which the parties have present enforceable rights and obligations.True / falseL2
- Sportéa offers a club a maintenance subscription for its equipment, renewed automatically each month. Each party may end it at any time, without penalty, with effect at the end of the current month. It is established (legal analysis, case datum) that the enforceable rights and obligations cover only the current month. The club has been a subscriber for three years and Sportéa expects it to remain one. Over what period does Sportéa apply IFRS 15 to this contract?Single choiceL2
- The criteria for the existence of a contract were met at contract inception. In what case must the entity reassess them?Single choiceL2
- Sorbel delivers components to Gravex every month under a two-year contract; the criteria for the existence of the contract were met at inception. In the tenth month, Gravex loses its main customer and access to its credit lines: its ability to pay deteriorates significantly (case datum). What must Sorbel do?Single choiceL3
- Ilvane signs a contract of 1,000,000 with a customer in a market where it has a practice of granting price concessions. It expects (documented judgement, case datum) to accept 800,000 in settlement. The customer has the ability and intention to pay 800,000, but not 1,000,000. On what amount does Ilvane assess collectability?Single choiceL2
- At contract inception, Lumen concludes that collection of the consideration is not probable (documented judgement, case datum): the arrangement does not meet the criteria for a contract. The customer nevertheless pays a non-refundable deposit of 50,000; Lumen is still required to deliver the machines ordered, which it has not yet delivered. How does it account for the deposit on receipt?Single choiceL3
- In 20X1, Tessane received 30,000 from a customer under an arrangement that did not meet the criteria for a contract; this amount was recognised as a liability. In 20X2, the contract is terminated; under its terms, the amount received is non-refundable. What does Tessane do in 20X2?Single choiceL3
- When an arrangement does not meet the criteria for a contract at inception, the entity can never account for it as a contract under IFRS 15, even if the situation changes.True / falseL2
- An arrangement with a customer does not meet the criteria for a contract, and the entity has received consideration. In which situations can it recognise this consideration as revenue?Multiple choiceL3
- Hélior, a manufacturer of solar panels, receives an order from a new foreign customer confirmed by email exchanges and by telephone, in accordance with the customary practices of its industry. Prices, quantities and payment at 90 days are specified. The customer's latest financial statements show repeated losses and very little cash; no other information makes it possible to assess its intention to pay. The customer offers to pay a non-refundable deposit before delivery. Write a memo stating whether a contract exists under IFRS 15 at inception and how to account for the deposit.JudgmentL3
- Castelo sells agricultural equipment to a distributor in a region where it has a practice of accepting settlements below the invoiced price, to preserve the business relationship. For a contract of quarterly deliveries over two years, it expects (documented judgement, case datum) to accept about 90% of the contractual price; the distributor has the ability and intention to pay that amount. One year later, the distributor's bank withdraws its credit lines and its payment delays build up. The finance director asks you for a position memo on the assessment of collectability at inception and after this event.JudgmentL4
- Méridia provides maintenance services to Ostrel every month under a three-year contract that met the criteria at inception. In the eighteenth month, Ostrel's financial position deteriorates sharply; Méridia reassesses collectability and concludes (documented judgement, case datum) that it is no longer probable for the services still to be provided. It nevertheless continues its services and receives 5,000 from Ostrel in the nineteenth month for that month's services, all earlier invoices having already been settled; its performance obligations for the following months remain and the contract is not terminated. How does Méridia account for the 5,000 received?Single choiceL4
Combination of contracts8 questions
- Ravelin enters into a contract with Hôtels Brissac and another with a subsidiary of Hôtels Brissac on the same day. Since the two customers are different legal entities, these contracts can never be combined.True / falseL2
- Ostrevent signs two separately negotiated contracts with the same customer a few days apart. The price of the second depends on the performance of the first. These contracts must be accounted for as a single contract, even though they were not negotiated as a package.True / falseL2
- On 5 June 20X1, Éolys signs a contract with Venterre to deliver turbines. On 12 June 20X1, it signs a separate maintenance contract with Venterre, whose fee is reduced by 20% if the delivered turbines do not reach the guaranteed output. Nothing indicates a joint negotiation. Which combination criterion is met?Single choiceL2
- Two contracts are entered into near the same time between Brocéliane and the same customer. Which of the following circumstances, each on its own, require them to be accounted for as a single contract?Multiple choiceL2
- On 3 March 20X1, Corvalis signs a contract with Hôtels Brésine to supply furniture for 400,000. On 10 March 20X1, it signs a contract with Brésine Services, a subsidiary of Hôtels Brésine, to install that furniture for 50,000. The correspondence shows that the installation price was set well below its usual level because the furniture price had been accepted. Installation and furniture are distinct goods and services (case datum). How does Corvalis analyse these contracts?Single choiceL3
- In January 20X1, Lauragais signs a contract with the customer Bastide to maintain its boilers. Eighteen months later, in July 20X2, it signs with Bastide a contract to supply new burners, negotiated separately at the usual rates. The price of each contract is unrelated to the other, and the burners and maintenance do not form a single performance obligation. The sales director proposes to combine the two contracts because the customer is the same. Which analysis should be retained?Single choiceL3
- On the same day, Arnave signs two contracts with Pellegrue: the design of a specialised production line for 120,000 and its construction for 900,000. Each price corresponds to Arnave's usual rates. Arnave has concluded (documented judgement, case datum) that design and construction are so closely intertwined that they form a single performance obligation. How does it account for these contracts?Single choiceL3
- On the same day, Mirepoix signs two contracts with the local authority Saint-Ybars, one to renovate a swimming pool, the other to landscape its surroundings. They were negotiated together to meet an overall budget and a single objective: reopening the site to the public. Mirepoix's management controller argues that the contracts are separate, since they are two separate documents, signed by different departments of the authority and invoiced separately. What do you think?Single choiceL3
Contract modifications14 questions
- Valtenor and its customer agree orally, during a site meeting, to extend the scope of the work. No written amendment is signed, but both parties customarily work on the basis of such verbal agreements. In the absence of a written amendment, there cannot be a contract modification under IFRS 15.True / falseL2
- The Orbéliane group is building a plant for a customer. The parties have approved in writing the addition of a loading dock but have not yet agreed on the corresponding price increase. Until that increase is set, Orbéliane must disregard the modification entirely in the transaction price.True / falseL3
- Under IFRS 15, under what conditions is a contract modification accounted for as a separate contract?Single choiceL2
- Lumiréo has undertaken to deliver 1,000 light fittings at EUR 300 each; each light fitting is a distinct good whose control is transferred on delivery. After 400 deliveries, the customer orders 200 additional light fittings at EUR 285 each. The stand-alone selling price of a light fitting is EUR 300; Lumiréo has documented that the EUR 15 reduction corresponds to selling costs it does not need to incur for this existing customer, and treats it as an adjustment to the stand-alone selling price justified by the circumstances of the contract. How does Lumiréo account for the modification?Single choiceL3
- Which of the following statements about the existence of a contract modification are correct?Multiple choiceL2
- A contract modification is not a separate contract. Which of the following statements are correct?Multiple choiceL3
- Sofaline has undertaken to deliver … office chairs at EUR … each; each chair is a distinct good whose control is transferred on delivery. After … chairs have been delivered, the parties approve the addition of … chairs at a unit price of EUR …, whereas the stand-alone selling price of a chair is EUR … at that date; the reduction is a commercial gesture unrelated to that price. Compute the unit price at which Sofaline recognises revenue for each chair remaining to be delivered after the modification.CalculationL3Variant
- Netalys provides a customer with a weekly office cleaning service for … years, for EUR … per year. Each week of service is distinct and together they form a series treated as a single performance obligation. After … years of performance, the customer agrees to extend the contract by … years for EUR … per year, whereas the stand-alone selling price of the service is then EUR … per year. The service is provided evenly. Compute the annual revenue that Netalys will recognise for each of the remaining years.CalculationL3Variant
- Bâtiroc is constructing an office building on its customer's land; the contract is a single performance obligation satisfied over time, with progress measured as costs incurred relative to total expected costs. Price: EUR …; total expected costs: EUR …. At the end of 20X1, costs incurred amount to EUR … and the revenue recognised reflects progress. Early in 20X2, the parties approve a change to the plans: price increased by EUR …, expected costs increased by EUR …. The remaining work is not distinct from the work already performed. Compute the cumulative catch-up adjustment (decrease in revenue) recognised at the modification date.CalculationL3Variant
- The Navirex shipyard is building a research vessel for an oceanographic institute. The contract is a single performance obligation satisfied over time; progress is measured using costs incurred. Agreed price: EUR …; expected costs: EUR …; costs incurred at 31 December 20X1: EUR …. On 2 January 20X2, the institute approves the installation of an on-board laboratory integrated into the hull: the price increases by EUR … and expected costs by EUR …. This work is not distinct from the vessel under construction. Compute the cumulative revenue after the modification and the cumulative catch-up adjustment (increase in revenue) recognised on 2 January 20X2.CalculationL4Variant
- Ferlance sells 2,000 pallets of wood pellets at EUR 150 per pallet, a price equal to the stand-alone selling price; each pallet is a distinct good delivered separately. After 1,200 deliveries, the customer obtains the addition of 500 pallets at EUR 72, a discount granted to preserve the business relationship and unrelated to the stand-alone selling price, which remains EUR 150. The chief financial officer proposes to account for the 500 pallets as a separate contract at EUR 72. What analysis do you retain?Single choiceL3
- Codexa is developing a loan management system for a bank; the contract is a single performance obligation, satisfied over time and 60% complete. The parties approve the addition of a credit-scoring module integrated into the core of the system: it modifies the architecture already delivered and can only work with it. The price increases by an amount below the stand-alone selling price of such a module. How does Codexa account for this modification?Single choiceL4
- Hydrovia is performing a civil engineering contract. The customer has approved a change of route that adds work, but still disputes the amount of the price increase claimed by Hydrovia. How does Hydrovia treat the change in price at the reporting date?Single choiceL3
- Kelvara provides a hospital with maintenance of its imaging equipment for 4 years, for EUR 200,000 per year; each year of service is distinct. At the beginning of the third year, the parties approve two changes: first, the addition of maintenance of 3 new scanners for 2 years at EUR 40,000 per year, a price equal to the stand-alone selling price of that service; second, the extension of night-time interventions on the existing equipment, approved by the hospital but with the price increase not yet negotiated. Write a memo analysing the treatment of each of these changes.JudgmentL4
Identifying performance obligations and series14 questions
- The promises to be analysed to identify performance obligations are limited to those explicitly written in the contract.True / falseL1
- Activities that an entity must undertake to fulfil a contract without transferring a good or service to the customer, such as the internal opening of the customer's file, are not performance obligations.True / falseL1
- Gardalis undertakes to provide daily security guarding of a logistics site for 3 years. Each day of service is distinct and substantially the same as the others; according to the case data, each day would be an obligation satisfied over time, measured using the same method. Gardalis identifies a single performance obligation, not one obligation per day.True / falseL2
- Pressafil delivers an identical batch of mechanical parts every month for 2 years; each batch is distinct and its control is transferred to the customer on delivery, at a point in time. These deliveries have the same pattern of transfer under IFRS 15 and therefore form a series that is a single performance obligation.True / falseL3
- When does the entity identify the performance obligations in a contract?Single choiceL1
- Logivia sells accounting software. The signed contract does not mention updates, but the policy published by Logivia on its website, known to its customers at the time of purchase, states that regulatory updates will be provided free of charge for 2 years as soon as they become available. How does Logivia treat these updates when identifying its performance obligations?Single choiceL2
- Paylane enters into a payroll outsourcing contract. Which of the following activities transfers no service to the customer and is therefore not a performance obligation?Single choiceL2
- Sécurio provides continuous remote monitoring of a customer's warehouses for 2 years, invoiced monthly. Each day of monitoring is distinct and substantially the same; according to the case data, each day would be an obligation satisfied over time whose progress would be measured based on time elapsed. How many performance obligations does Sécurio identify?Single choiceL3
- Which of the following may be goods or services promised to a customer in a contract?Multiple choiceL1
- Which of the following sources may create an implied promise to be taken into account in a contract with a customer?Multiple choiceL2
- Which of the following conditions must be met for promised goods or services to be treated as a series that is a single performance obligation?Multiple choiceL3
- The Autovia dealership sells new vehicles. For several years, it has offered all its buyers free servicing of the vehicle for 2 years; this practice is known to customers and highlighted by its sales staff, but the order form says nothing about it. How does Autovia analyse the promises in a sales contract?Single choiceL2
- Cloudélis provides a continuously available data hosting service for 3 years, invoiced quarterly. Each month of service is distinct and substantially the same; according to the case data, each month would be an obligation satisfied over time, measured based on time elapsed. The accountant proposes to identify 12 quarterly performance obligations. What conclusion do you retain?Single choiceL3
- The operator Connectis signs a 24-month internet access contract. On signing, it creates the customer's account and assigns it an identifier in its internal systems, without transferring anything to the customer. Thereafter, each month of access is distinct and substantially the same; according to the case data, each month would be satisfied over time using the same measurement method. Which performance obligations does Connectis identify?Single choiceL3
Distinct goods or services13 questions
- It is sufficient for the customer to be able to benefit from a good on its own for that good to be distinct under IFRS 15.True / falseL2
- Structa undertakes to design and build a water treatment plant. It provides the studies, the equipment and the works, and provides a significant service of integrating these items into a single facility requested by the customer. The promises to transfer the studies, the equipment and the works are not separately identifiable.True / falseL3
- When a promised good is not distinct, the entity combines it with other promised goods or services until it identifies a bundle that is distinct, which may result in a single performance obligation for the whole contract.True / falseL2
- Which two criteria must be met for a promised good or service to be distinct?Single choiceL2
- What is the objective of assessing whether a promise to transfer a good or service is separately identifiable?Single choiceL3
- Which of the following facts is not among the indicators, cited by IFRS 15, that promises are not separately identifiable?Single choiceL3
- Which of the following statements about distinct goods or services are correct?Multiple choiceL2
- Médisys undertakes to deliver and commission a complete imaging room: scanner, control software, technical furniture and cabling. The customer is buying a functioning room meeting a single set of specifications. Which of the following facts indicate that the promises are not separately identifiable?Multiple choiceL4
- Pressor sells a standard packaging machine, which works without adaptation, together with its installation. The installation does not modify the machine, is simple and could be performed by other providers on the market. The customer can operate the machine as soon as it is installed. How many performance obligations does Pressor identify?Single choiceL3
- Bâtisol is building a clinic for a customer. The contract covers design, supply of materials, structural works and finishing works; Bâtisol is responsible for the whole and integrates these items to deliver the clinic specified in the contract. The management controller proposes to identify one performance obligation per item. What conclusion do you retain?Single choiceL3
- Softéam provides a distributor with existing warehouse management software and undertakes to customise it significantly: adding functionality and redesigning the interfaces so that it controls the customer's own automated equipment. Without this customisation, the software does not meet the use provided for in the contract. The contract also provides for acceptance tests performed by Softéam. What conclusion do you retain?Single choiceL4
- Agrimek enters into a contract with a farm that includes: the supply of pumps, moisture sensors and control software; the design of an irrigation network specific to the farm; the integration and calibration of the whole by Agrimek to deliver an operational precision irrigation system; and a standard 3-year maintenance service, also offered by other providers and not needed for the system to work. According to the case data, the customer can benefit from the maintenance together with readily available resources. Write a memo identifying the performance obligations in the contract.JudgmentL4
- Imprimeo sells a communications agency a standard digital press and a 2-day training course on its routine use. The press works without the training; the training does not modify the press, and other organisations offer equivalent training. According to the case data, the customer can benefit from each item on its own or together with readily available resources. The agency's administrative director argues that there is only one performance obligation, as the training cannot be separated from the press. Write a reasoned memo.JudgmentL3
Determining the transaction price13 questions
- Value added tax invoiced to the customer and collected on behalf of the State is part of the transaction price.True / falseL1
- To determine the transaction price, the entity assumes that the goods or services will be transferred as promised under the existing contract and that the contract will not be cancelled, renewed or modified.True / falseL1
- Mobilis usually invoices its customers at the contract price but, under a practice known to all, systematically grants a year-end discount. To determine the transaction price, Mobilis must consider only the written terms of the contract, excluding its business practices.True / falseL2
- What is the transaction price under IFRS 15?Single choiceL1
- Datalys enters into a 3-year services contract for EUR 90,000 per year. Based on its history, it considers it very likely that the customer will renew the contract for 2 additional years at the same price. What transaction price does it use at contract inception?Single choiceL2
- When a performance obligation is satisfied, what amount does the entity recognise as revenue?Single choiceL2
- Which of the following must the entity take into account to determine the transaction price?Multiple choiceL2
- Hôtelia organises a residential seminar for a corporate customer. Its invoice includes: accommodation, room hire, VAT collected for the State, the tourist tax collected on behalf of the municipality and the meals served by Hôtelia. Which of these amounts are excluded from Hôtelia's transaction price?Multiple choiceL3
- Ébénis delivers furniture to a hotel. Its invoice amounts to EUR … including taxes, of which VAT at …% collected on behalf of the State. No other consideration is provided for. Compute the transaction price.CalculationL2Variant
- The Valrose estate hosts the annual conference of a trade federation and sends it a total invoice of EUR …. This total includes VAT of EUR … collected for the State and a tourist tax of EUR … collected on behalf of the municipality; the balance remunerates the accommodation and catering provided by Valrose. Compute Valrose's transaction price.CalculationL2Variant
- Ingénova designs a production line for a customer for a fixed price of EUR …. A bonus of EUR … will be due if the line is delivered before an agreed date; only two outcomes are possible. Ingénova estimates the bonus using the most likely amount, which is earning the bonus, and concludes, based on its judgement, that it is highly probable that including it will not result in a significant reversal of cumulative revenue. The contract also provides that Ingénova pays the customer EUR … as a contribution to fitting out its premises, without receiving any distinct good or service in exchange. Compute the transaction price.CalculationL3Variant
- Brasselin sells a batch of professional ovens to a restaurant chain. In exchange, the chain pays EUR … and transfers to Brasselin a commercial vehicle with a fair value of EUR …. Under the same contract, Brasselin grants the chain a credit note of EUR … that can be applied against its next invoices, without receiving any distinct good or service in exchange. Compute the transaction price.CalculationL3Variant
- Vitralis delivers glazing to a property developer, which obtains control on delivery. The developer will pay EUR … in … years. Vitralis concludes, based on its judgement, that this payment schedule provides the customer with a significant benefit of financing; the rate that would be used in a separate financing transaction between the parties is …% per year (case data). Compute the transaction price, i.e. the amount the developer would have paid in cash on delivery.CalculationL3
Variable consideration and the constraint17 questions
- Lavergne sells a packaging line for 400,000. The contract provides for a penalty of 2,000 per week of late delivery, deducted from the price. This clause makes the promised consideration variable.True / falseL2
- Brennac is negotiating four maintenance contracts. Which one includes variable consideration?Single choiceL2
- Valmigère, a pump manufacturer, is reviewing the clauses of its customer contracts. Which of them make the consideration variable?Multiple choiceL2
- Brissac will receive a bonus of 30,000 if it delivers a prototype before 30 September 20X1, and nothing otherwise. It has no similar contracts. Which estimation method is, at first sight, the most appropriate to predict the bonus amount to which it will be entitled?Single choiceL2
- Delmas enters into hundreds of similar furniture supply contracts each year, with year-end rebates. For a typical contract, its historical data give the following outcomes: … with a probability of …%, … with a probability of …% and … with a probability of …%. Delmas has concluded that the expected value is the most predictive method and that the constraint does not reduce the estimate (case data). Compute the estimated consideration.CalculationL2Variant
- The carrier Ferrand invoices its logistics customers using a sliding scale linked to annual tonnages. Based on its portfolio of comparable contracts, it uses three scenarios for the contract signed with Hélix: … (weighting …%), … (weighting …%) and … (weighting …%). Ferrand estimates the consideration using the expected value and has concluded that the constraint does not apply (given judgements). What amount does it use?CalculationL3Variant
- Granval is building a warehouse for a fixed price of …. It will receive a bonus of … if the building is accepted before 30 June 20X2, and no bonus otherwise. Granval assesses the probability of meeting the deadline at …%, uses the most likely amount and has concluded that it is highly probable that including the bonus will not result in a significant reversal of cumulative revenue (given judgements). Compute the transaction price.CalculationL3Variant
- The software house Lormont is deploying a payroll application at Cassin for fees of …. An additional … will be paid if go-live succeeds at the first attempt; otherwise no additional amount is due. Lormont assesses the chance of success at the first attempt at …% and uses the most likely amount (given judgement). What transaction price results from this estimate?CalculationL3Variant
- The cooperative Sarthenay sells seeds with an additional discount if the yield of the customer's harvest exceeds a threshold. Which of the following facts increases the risk of a significant reversal of revenue recognised for this discount?Single choiceL3
- Pellan, a video game publisher, is assessing the constraint on variable consideration in a distribution contract. Which items must it take into account?Multiple choiceL3
- Ormeau manages a securities portfolio for a customer over 3 years. It receives a fixed fee of 400,000 per year and a performance fee equal to 20% of the positive difference between the portfolio's performance and a stock market index, computed at the end of the 3 years. According to management's simulations, this fee may range from 0 to 900,000; no minimum amount can be regarded as highly probable, and Ormeau's history for this type of mandate has little predictive value (case data). At contract inception, which treatment of the performance fee is most consistent with the constraint?Single choiceL4
- The consultancy Hautval assists Néolis in filing an application for marketing authorisation of a medical device. Its fees comprise a fixed amount of 600,000 and a success fee of 150,000, payable only if the competent public authority grants the authorisation. The decision is expected in 18 months; Hautval has never handled an application before this authority. Write a memo determining the treatment of the success fee in the transaction price at contract inception.JudgmentL4
- Corbière excluded a performance bonus from the transaction price at the inception of a 2-year contract. It need not revisit this assessment until the uncertainty is finally resolved, at the end of the contract.True / falseL3
- Albane sells 1,000 lamps for cash at 50 each, i.e. …, with a 30-day right of return for a refund. Based on its experience, it expects to refund …, an estimate judged consistent with the constraint (case data). Record the sale entry, excluding the derecognition of inventory and the cost of sales, which are recorded in a separate entry not requested here.Journal entryL2Variant
- The wholesaler Corvel delivers supplies to Ibéris during the first quarter of 20X1 and collects … at the full price. The contract provides that Ibéris will be refunded at year-end a rebate computed on its annual purchases; Corvel expects to pay back … in respect of this quarter's purchases (an estimate judged consistent with the constraint, case data). Record the entry for the quarter.Journal entryL3Variant
- Tessier sells cameras with a right of return. For its December 20X1 sales, it recognised a refund liability of …. At the reporting date of 31 December 20X1, in the light of observed return trends (no refund has yet been paid), it reduces its estimate of expected refunds to …. Record the entry adjusting the refund liability; the corresponding adjustment to the asset for the right to recover products is recorded in a separate entry not requested here.Journal entryL3
- Quercy Agri sells fertiliser to cooperatives at a contractual price of 80,000 per delivery. The contract provides for no reduction. For several years, however, Quercy Agri has accepted, when the harvest is poor, a payment lower than the agreed price, and this practice is known to its customers. How should the promised consideration be characterised?Single choiceL2
Significant financing component16 questions
- The contract between Mirabel and its customer mentions neither an interest rate nor any financing. Mirabel can therefore conclude, without further analysis, that it contains no significant financing component.True / falseL2
- Aubrac sells agricultural greenhouses payable in several annual instalments. To assess whether its contracts contain a significant financing component, which items must it in particular consider?Single choiceL2
- In which of the following situations does the standard state that there is no significant financing component?Multiple choiceL2
- To assess whether the financing component of a contract is significant, Puymorens considers in particular the expected length of time between the transfer of the goods to the customer and their payment, combined with market interest rates.True / falseL2
- Castagnède sells a machine payable 3 years after delivery and has concluded that there is a significant financing component. The available data are: risk-free rate 2%, Castagnède's borrowing rate 4%, rate at which Castagnède would separately finance this customer given its credit risk and the collateral provided 7%, promotional rate shown in the brochure 0%. Which rate should be used to adjust the consideration?Single choiceL3
- In 20X1 Lescure discounted a payment deferred for 3 years at a rate of 6%. As market rates rose sharply in 20X2, it must revise this rate at the 20X2 reporting date.True / falseL3
- On 1 January 20X1, Montagut transfers control of a press to Riols, which will pay … in … years. Montagut has concluded that there is a significant financing component; the rate of a separate financing transaction with Riols at that date is …% (case data). Interest is computed each year on the opening balance of the receivable (teaching assumption). Compute the revenue recognised on transfer and the interest income for 20X1.CalculationL3Variant
- On 1 January 20X1, Sabarthès delivers a bottling line to the cooperative Vinsobres, which will pay … at the end of a …-year credit period. The contract contains a significant financing component. The rate at which Sabarthès would separately finance Vinsobres is …%; the risk-free rate is …% (case data). Interest is computed on each year's opening balance (teaching assumption). Compute the revenue from the delivery and the interest income for 20X2.CalculationL4Variant
- On 1 January 20X1, Pradelles receives an advance of … for a custom-made tank that it will deliver in … years. It has concluded that there is a significant financing component; the rate that would apply in a separate financing transaction from the customer to Pradelles, given Pradelles' credit risk, is …% (case data). Interest is computed on the opening balance of the contract liability (teaching assumption). Compute the interest expense for 20X1 and the revenue recognised on delivery.CalculationL3Variant
- On 1 January 20X1, the shipowner Kerdonis pays the full price, …, of a tug that the shipyard Plouzac will deliver on 31 December 20X3, i.e. in … years. Plouzac has concluded that this advance payment provides it with a significant financing benefit. The rate that would apply in a separate financing transaction from Kerdonis to Plouzac, given Plouzac's credit risk, is …% (case data); interest is computed on each year's opening balance (teaching assumption). Compute the interest expense for 20X3 and the revenue recognised on delivery.CalculationL4Variant
- On 1 January 20X1, Varenne delivered an industrial oven whose cash selling price is …; the customer will pay … on 31 December 20X2. On delivery, Varenne recognised revenue and a receivable of 300,000. The rate of a separate financing transaction with this customer is …% (case data); interest is computed on the opening balance of the receivable (teaching assumption). Record the entry at 31 December 20X1 relating to the financing.Journal entryL3Variant
- On 1 January 20X1, Kerlan installed a postal sorting system at Ardoise; control was transferred on that date. The cash price is … and Ardoise will pay … on 31 December 20X3. Kerlan recognised a receivable of 400,000 on installation; the rate of a separate financing transaction with Ardoise is …% (case data) and interest is computed on each year's opening balance (teaching assumption). Record the financing entry at 31 December 20X2.Journal entryL3Variant
- On 1 January 20X1, Morvan receives … from a customer for a flight simulator that it will deliver on 31 December 20X2. It recognised a contract liability and concluded that there is a significant financing component. The rate of a separate financing transaction from the customer to Morvan, reflecting Morvan's credit risk, is …% (case data). Record the financing entry at 31 December 20X1.Journal entryL3
- Bastide renovates the façade of a building for 900,000. In accordance with industry practice, the customer withholds 5% of the price for 1 year after acceptance, to protect itself against defective work; this amount is released if no reservation is raised. The price includes no mark-up linked to this delay, and the retention is judged proportionate to its purpose (case data). How should Bastide analyse this retention?Single choiceL3
- Valcros manufactures custom-built turbines. A customer offers to pay 2,400,000 on order, 4 years before delivery, instead of 3,000,000 on delivery, the price it would pay in cash at that date. Valcros accepts in order to finance production without borrowing. Its finance director proposes to recognise a contract liability of 2,400,000 and to release it unchanged to revenue on delivery. Which analysis do you retain?Single choiceL4
- Tarnos Pompes delivers industrial pumps to a customer. From contract inception, it expects to be paid 10 months after delivery, at a price slightly above the cash price. Must it adjust the promised consideration for the effects of a financing component?Single choiceL2
Non-cash consideration and consideration payable to a customer13 questions
- Fargues receives a utility vehicle from a customer as payment for fit-out works. To determine the transaction price, it uses the carrying amount of the vehicle in the customer's books.True / falseL2
- The architecture firm Ventadour designs the extension of an art gallery and receives in exchange a unique work of art whose fair value cannot be reasonably estimated. How does it measure the consideration received?Single choiceL2
- The consultancy Arvel assists the listed company Solenne with a restructuring. It receives cash fees of … and … Solenne shares, whose fair value per share at the measurement date used is … (case data). Compute the transaction price.CalculationL2Variant
- The coachbuilder Ostal manufactures a refrigerated truck for Glacière for … in cash. Glacière supplies the chassis, of which Ostal obtains control (given conclusion), with a fair value of …. It also lends Ostal a test bench with a fair value of …, which it will take back on delivery and of which Ostal does not obtain control. Compute the transaction price.CalculationL3Variant
- Brumaire provides IT support for … months to a young biotechnology company. In exchange, it receives no cash but a licence to use an unlisted patent, whose fair value cannot be reasonably estimated (case data). The stand-alone selling price of the support is … per month. Determine the transaction price.CalculationL3Variant
- For some contracts, Tarnos receives non-cash consideration. Which statements are correct?Multiple choiceL3
- The biscuit maker Lanvaux pays the retail chain Primavera, its customer, a contribution of 15,000 for listing its products, without receiving any distinct good or service in exchange. Lanvaux recognises this amount as a selling expense.True / falseL2
- Morgat manufactures cleaning products sold to supermarkets, which resell them to consumers. Which of the following is consideration payable to a customer?Single choiceL2
- In 20X1, the fruit juice maker Laurac delivers products invoiced at … to the store chain Distrimax. To obtain new shelf space, it pays Distrimax … during the year, without receiving any distinct good or service (given conclusion). Compute the revenue for 20X1 from this contract.CalculationL2Variant
- The brewery Cantal sells beer worth … to the retailer Marchéo in 20X1. It pays Marchéo … for a poster campaign in its stores, a distinct service whose fair value, reasonably estimated, is … (case data). Compute the revenue for 20X1 and the amount recognised as a purchase of the advertising service.CalculationL3Variant
- The publisher Kerjean pays 40,000 to a distributor customer for footfall data from its outlets. Kerjean concludes that this is a distinct service but cannot reasonably estimate its fair value. How should the 40,000 be treated?Single choiceL3
- The cheese maker Salers sold cheese to the purchasing group Alpina in March 20X1 and recognised the related revenue. In September 20X1, following a commercial renegotiation, it promises Alpina a payment of 6,000 without receiving any distinct good or service; it previously had no customary practice or intention of doing so (case data). The payment will be made in December 20X1. When does Salers recognise the reduction of revenue?Single choiceL3
- On 1 March 20X1, the dairy Aubrac announces a campaign of discount coupons that consumers can use on its yoghurts bought in stores between April and June. The yoghurts concerned will be sold to distributors, Aubrac's customers, from April to June; the number of coupons that will be used is uncertain. When and how does Aubrac recognise the reduction of revenue?Single choiceL3
Allocation on relative stand-alone selling prices16 questions
- The objective of allocating the transaction price is to attribute to each performance obligation the amount of consideration to which the entity expects to be entitled in exchange for transferring the related good or service.True / falseL1
- The list price of a good is presumed to be its stand-alone selling price.True / falseL1
- For a promised good or service, which item of data is the best evidence of its stand-alone selling price?Single choiceL1
- Arvelle enters into a contract with two performance obligations. At what date does it determine the stand-alone selling prices used to allocate the transaction price?Single choiceL2
- Corvane sells a single monthly security service identified as one performance obligation, for a fixed price. It must allocate that fixed price on the basis of relative stand-alone selling prices before recognising revenue.True / falseL2
- Halvène must estimate the stand-alone selling price of a service it never sells separately. Which of the following methods are cited by the standard as suitable (subject, for one of them, to restrictive conditions)?Multiple choiceL2
- Velorine sells a customer a sorting machine and a two-year maintenance contract for a total price of …. The two items are distinct performance obligations. Velorine regularly sells the machine on its own to similar customers at … and the maintenance on its own at …; the list price of the machine is …. Compute the amount of the transaction price allocated to the machine.CalculationL2Variant
- A sports equipment supplier, Tonalis, delivers a set of machines to a gym and assembles them at the customer's premises, for … in total. Machines and assembly are two performance obligations. Tonalis usually sells the machines on their own for … and the assembly on its own for …. What share of the transaction price relates to the assembly?CalculationL2Variant
- The Mirabel group sells a printing company a digital press, the supply of spare parts for three years and operator training, for …. The three items are distinct performance obligations, and no evidence shows that the discount granted relates to any one of them in particular. Observed stand-alone selling prices: press …, spare parts …, training …. Compute the transaction price allocated to the spare parts and to the training.CalculationL3Variant
- Pléiade sells an industrial oven and a maintenance service tailored to this customer, for …. The oven is regularly sold on its own at …. The maintenance service is never sold separately; management uses the expected cost plus a margin approach, with an expected cost of … and a margin of …% on cost, which (case data) is Pléiade's usual margin on comparable services. Compute the estimated stand-alone selling price of the service, then the transaction price allocated to it.CalculationL3Variant
- The engineering firm Quartane charges … for a design study, commonly sold on its own at …, and for the supervision of the related site work, a service it has never sold separately. It estimates the stand-alone selling price of the supervision at the expected cost of … plus a margin of …% on cost (assumption chosen by management). The two services are distinct performance obligations. Determine the estimated stand-alone selling price of the supervision and the transaction price allocated to it.CalculationL3Variant
- The publisher Sorbaline launches new software that it has never yet sold separately and for which it has not yet set a price. It sells it to a first customer together with installation and one year of support, for …. The three items are distinct performance obligations. Installation and support are regularly sold on their own, at … and … respectively. Sorbaline estimates the stand-alone selling price of the software using the residual approach. Compute that estimated price.CalculationL4Variant
- Ivrane designs exhibition spaces. Its exhibition design services are sold separately at prices that vary widely from one customer to another, with no representative range (documented finding of management). A museum entrusts it, for …, with the design of a room, the supply of display cases and staff training, three distinct performance obligations. The display cases and the training are regularly sold on their own, at … and … respectively. Estimate the stand-alone selling price of the exhibition design using the residual approach.CalculationL4Variant
- Néroval sells a sensor kit and a calibration service. Calibration is not sold separately, but several competitors offer an equivalent service at stable, known prices; Néroval also tracks its costs accurately. The controller proposes estimating the price of calibration using the residual approach, as it is the simplest method. What do you conclude?Single choiceL3
- Talmaride sells two ranges of energy audit services that are never sold separately, in comparable conditions. For the Habitat range, it estimates the stand-alone selling price using the adjusted market assessment approach based on observable competitor prices. For the Tertiaire range, where the same market data exist, it uses an undocumented internal cost that is more favourable to revenue for the period. What is your assessment?Single choiceL4
- In a single contract, Ombrelune sells equipment with an observable, stable price and two consulting services whose stand-alone selling prices are both highly variable. How can it estimate the stand-alone selling prices of the two services?Single choiceL4
Allocating a discount and variable consideration10 questions
- A contract includes a discount when the sum of the stand-alone selling prices of the promised goods or services exceeds the promised consideration; unless there is observable evidence to the contrary, that discount is allocated proportionately to all the performance obligations in the contract.True / falseL2
- Brumaire sells three products A, B and C in a single contract for …. It regularly sells each of them separately, at …, … and … respectively, but never sells a bundle of some of these products at a discount. Each product is a distinct performance obligation. Compute the amount of the discount and the transaction price allocated to product C.CalculationL3Variant
- The digital agency Pervenche offers a craftsman the creation of a website and its hosting for two years for a package price of …. Sold separately, hosting is charged … and website creation …, which are their stand-alone selling prices. Nothing indicates that the reduction concerns one of the two performance obligations rather than the other. Compute the discount and the transaction price allocated to the website creation.CalculationL3Variant
- Givrane sells three products X, Y and Z for …, each being a distinct performance obligation. It regularly sells each product separately: X at …, Y at … and Z at …. It also regularly sells the bundle Y + Z at a price of …. Compute the transaction price allocated to product X and that allocated to Y and Z together.CalculationL4Variant
- The furniture maker Ardoisine receives an order from a school for … covering desks, chairs and cabinets, three distinct performance obligations. Ardoisine commonly sells each category separately, at stand-alone selling prices of … for the desks, … for the chairs and … for the cabinets. It also permanently offers, and regularly sells, a chairs + cabinets package at …. Determine the transaction price allocated to the desks and that allocated to the chairs and cabinets together.CalculationL4Variant
- Lunesse wishes to allocate an entire discount to two of the four performance obligations in a contract. Which conditions must be met?Multiple choiceL4
- Fennelor sells three items A, B and C, distinct performance obligations, for 100,000. A and B are regularly sold on their own, at 40,000 and 30,000, and regularly together at 60,000; the conditions for allocating that discount of 10,000 to the bundle A + B alone are met (case data). The stand-alone selling price of C, sold to different customers for highly variable amounts, is estimated using the residual approach. What is the estimated stand-alone selling price of C?Single choiceL4
- Maraudine signs a contract for office cleaning and lift maintenance services, two performance obligations. A variable bonus relates to the lift maintenance alone. Which statement is correct?Single choiceL3
- Eskelor has allocated a variable bonus entirely to one of the performance obligations in a contract, the conditions set by the standard being met (case data). The remainder of the transaction price, which does not meet those conditions, is allocated using the general allocation requirements, including those on discounts.True / falseL3
- Corbières Logiciels undertakes to develop a customised management module for the customer Vinéa and to train its users, two performance obligations. The fixed price is 260,000, plus a bonus of 20,000 if the module is delivered before 30 September 20X1. Corbières Logiciels has included the bonus in the transaction price after assessing the constraint (judgement, case datum). The bonus depends solely on the efforts devoted to the module, and allocating it entirely to the module depicts the amount to which Corbières Logiciels expects to be entitled for that module (documented analysis). How is the bonus allocated?Single choiceL3
Changes in the transaction price10 questions
- Once set at contract inception, the transaction price can no longer change, except through a contract modification approved by the parties.True / falseL2
- During an industrial maintenance contract, Orvanel observes several events. Which of them may change the transaction price?Multiple choiceL3
- Cendrine and its customer approve an amendment that adds services and increases the contract price. How does Cendrine account for the resulting change in the transaction price?Single choiceL2
- Valdrène builds a footbridge for a fixed price of …, with a bonus of … if the structure is delivered before an agreed date. At inception, Valdrène excluded the bonus from the transaction price, as its assessment of the constraint on variable consideration did not allow it to be included (case data). Six months later, early delivery is certain and the bonus is earned. Compute the change in the transaction price and the revised transaction price.CalculationL2Variant
- The firm Solvarine manages the energy renovation of a building for a fixed fee of …, plus an energy savings incentive capped at …. At inception, Solvarine included … for the incentive in the transaction price, an amount it then considered highly probable not to have to reverse (case data). The final measurements set the incentive at …. Compute the change in the transaction price and the revised transaction price.CalculationL3Variant
- Azurine's contract included a variable bonus from the outset. A modification, which is not a separate contract, was then accounted for as the termination of the existing contract and the creation of a new contract, the remaining goods being distinct from those already transferred. After that modification, the uncertainty about the bonus promised before the modification is resolved. To which performance obligations does Azurine allocate the price change?Single choiceL3
- When the transaction price increases after contract inception, the entity allocates the increase to the performance obligations on the basis of their stand-alone selling prices at the date of the change.True / falseL2
- Lisière sold a laboratory an analysis instrument and training for its staff, two performance obligations. At contract inception, the transaction price was allocated on the basis of stand-alone selling prices: … to the instrument and … to the training. Control of the instrument was transferred in 20X1; the training had not started at 31 December 20X1. At the end of 20X1, the resolution of an uncertainty increases by … the amount of consideration to which Lisière expects to be entitled; this change does not relate specifically to either obligation (case datum). At that date, the instrument would represent only … of the total stand-alone selling prices. Compute the revenue recognised immediately for the instrument and the amount added to the price allocated to the training.CalculationL3Variant
- The heating contractor Marvejols Énergie has a contract with a clinic for the supply of a boiler and its maintenance for 3 years. The initial allocation of the transaction price, based on stand-alone selling prices, is … to the boiler, control of which was transferred in 20X1, and … to the maintenance, which will start in 20X3. In 20X2, the resolution of an uncertainty about an overall rebate provided for in the contract reduces by … the consideration to which Marvejols Énergie expects to be entitled; the rebate relates to the contract as a whole (case datum). The stand-alone selling price of the boiler fell to … in 20X2. Compute the reduction in revenue recognised in 20X2 for the boiler and the revised price allocated to the maintenance.CalculationL3Variant
- Nébias Médical sold a hospital an imaging system (obligation satisfied in 20X1, allocated price of 300,000) and an operating support service for 2 years (allocated price of 100,000). A bonus depends on the availability rate achieved through the support service. In 20X2, the estimate of the bonus increases by 12,000. Nébias Médical has established that the payment terms of the bonus relate specifically to its support efforts and that allocating it entirely to the support is consistent with the allocation objective (documented analysis). How is the increase of 12,000 allocated?Single choiceL3
Transfer of control and obligations satisfied over time22 questions
- Revenue from a contract is recognised as soon as it is signed, since the customer has committed to pay.True / falseL1
- Control of an asset includes the ability to prevent other entities from directing its use and obtaining its benefits.True / falseL1
- Under IFRS 15, what characterises a customer having control of an asset?Single choiceL1
- A performance obligation that meets none of the criteria for recognition over time is satisfied at a point in time.True / falseL2
- Primevère enters into a contract for custom manufacturing. When must it determine whether the performance obligation is satisfied over time or at a point in time?Single choiceL2
- Which of the following situations each constitute, on their own, a criterion for recognising revenue over time?Multiple choiceL2
- Nettalis cleans a customer's offices every evening for one year. How should its performance obligation be characterised?Single choiceL2
- Fergane manufactures in its plant a machine designed for a single customer, with no alternative use to it. The contract gives it no right to payment if the customer terminates before delivery. It is accepted (case data) that the customer neither receives nor consumes any benefit during manufacture and does not control the machine while it is being built. What conclusion should be reached?Single choiceL2
- To assess whether the performance creates or enhances an asset controlled by the customer, the asset concerned may be tangible or intangible, for example work in progress.True / falseL2
- The carrier Routhéa transports a customer's goods by truck over a 1,200 km route. The contract prohibits any subcontracting. If another carrier had to take over the route halfway, it would not need to repeat the first half of the journey. How should Routhéa's performance obligation be analysed?Single choiceL3
- Bâtisseurs de Lirac extends a customer's factory on the customer's land. After analysis (case data), the customer controls the extension as it is built: it can change its design, deny third parties access to it and obtain its benefits, the part built belonging to it as construction proceeds. How should revenue be recognised?Single choiceL3
- The assessment of whether an asset has no alternative use to the entity is performed again at each reporting date, to reflect market developments.True / falseL3
- Cassiopée manufactures equipment under a firm contract. Its internal auditor argues that the equipment has an alternative use, since if the customer terminated the contract, Cassiopée could sell it to someone else. Which principle applies?Single choiceL3
- Pompéa mass-produces standard pumps. A contract assigns to a customer 50 pumps identified by their serial numbers, but Pompéa can deliver other identical pumps from its stock to that customer without breaching the contract or incurring significant additional costs. The contract provides a right to payment on termination. It is accepted (case data) that the first two criteria for recognition over time are not met. What do you conclude?Single choiceL3
- The Haliane shipyard builds a polar research vessel to specifications unique to a scientific institute. To sell it to another buyer, it would have to be reworked at great cost or sold at a significant loss. The contract gives Haliane, at all times, if the institute terminates for reasons other than Haliane's failure to perform, the right to recover the costs incurred plus a reasonable margin (an enforceable right according to a legal opinion, case data). How should revenue be recognised?Single choiceL3
- A clause that, if the customer terminates, only allows the entity to obtain compensation for its potential loss of profit is enough to establish an enforceable right to payment for performance completed to date.True / falseL3
- Olbrane's contract provides for invoicing the customer only on completion of the work. If the customer terminates for reasons other than Olbrane's failure to perform, Olbrane is nevertheless entitled, at all times, to the costs incurred plus a reasonable margin. The CFO considers that there is no right to payment for performance completed to date, as there is no present right to invoice. What is your view?Single choiceL3
- Ténarès develops bespoke software with an expected margin of 35%, well above the operating margin of 12% it usually earns on similar contracts. If the customer terminates for reasons other than Ténarès's failure to perform, the contract entitles it, at all times, to the costs incurred plus 12%. The software has no alternative use to Ténarès (case data). Is there an enforceable right to payment for performance completed to date?Single choiceL4
- Mérindel manufactures custom lift cars, with no alternative use to it. Its contracts provide for a right to payment of the costs incurred plus a reasonable margin if the customer terminates. A legal opinion indicates, however, that in the country concerned the courts consistently deprive such clauses of effect. It is accepted (case data) that the first two criteria for recognition over time are not met. What do you conclude?Single choiceL4
- Quillane is assessing the existence and enforceability of its right to payment for performance completed to date. Which elements must it consider?Multiple choiceL4
- Hydrelle designs and manufactures in its plant a turbine adapted to the characteristics of a specific dam; adapting it to another site would require a costly redesign, and reselling it as is would only be possible at a significant loss. If the customer terminates for reasons other than Hydrelle's failure to perform, the contract provides at all times for payment of the costs incurred plus a reasonable margin, a right confirmed by a legal opinion (case data). The turbine will remain in the plant until it is shipped. The CFO proposes recognising revenue on delivery, on the grounds that the customer does not hold the turbine during manufacture. Write a reasoned memo on the pattern of revenue recognition.JudgmentL4
- The developer Belcastel sells off-plan a specific flat in a building under construction. The contract prohibits it from transferring that unit to another buyer, and the buyer could enforce its rights to that unit if it were transferred. According to a legal opinion, the contract and the law of the country give Belcastel, at all times, if the buyer terminates for reasons other than the developer's failure to perform, the right to obtain the price of the work performed, including a margin. In recent years, Belcastel has waived that right twice, for commercial reasons, out of thousands of contracts. The statutory auditor questions the recognition over time applied. Formulate and justify your opinion.JudgmentL4
Performance obligations satisfied at a point in time12 questions
- For a performance obligation satisfied at a point in time, the transfer of legal title to the customer is on its own sufficient to determine when revenue is recognised.True / falseL1
- When a performance obligation is satisfied at a point in time, the entity sets that point at the moment the customer obtains control of the asset, using indicators such as physical possession or customer acceptance.True / falseL1
- Which of the following is not one of the indicators of the transfer of control listed in IFRS 15 for an obligation satisfied at a point in time?Single choiceL1
- Ardoisière du Lys sells pallets of roof tiles to a wholesaler. Which of the following facts, observed on 31 March 20X1, are indicators that the wholesaler has obtained control of the tiles?Multiple choiceL2
- Fonderie Valmont signs a contract on 2 December 20X1 to sell 40 industrial valves. The valves are delivered and accepted without reservation by the customer on 28 December 20X1; title passes on delivery and the invoice, issued on delivery, is payable within 60 days. The sale is a performance obligation satisfied at a point in time. On which date does Valmont recognise revenue?Single choiceL2
- Brasserie des Combes delivers kegs to a bar under a consignment arrangement: the brewery keeps the kegs until they are sold on to consumers and can require their return. The brewery must recognise revenue as soon as the kegs are delivered to the bar, since the bar has physical possession of them.True / falseL2
- Cartonnerie Maubert sells 20,000 boxes to a logistics company. The contract includes an acceptance clause covering only the dimensions and weight of the boxes. Maubert checks both criteria before shipment and documents compliance. The boxes are delivered on 15 June 20X1; the customer signs the acceptance report on 5 July 20X1. The other indicators (title, possession, right to payment) are present on delivery. When is control transferred?Single choiceL2
- Optiméa delivers three laboratory analysers to a clinic on 1 October 20X1 for a 90-day trial period. The clinic only commits to pay at the end of the trial and can return the devices free of charge during that period. It uses them from delivery. The trial expires on 30 December 20X1; at that date, the clinic has neither expressly accepted nor returned the devices. When does Optiméa recognise revenue?Single choiceL3
- Agromat sells six combine harvesters to a farming cooperative. Lacking space in its sheds, the cooperative asks Agromat in writing to keep the machines until spring. On 20 November 20X1, the machines are complete, tagged in the cooperative's name, stored separately and ready for delivery; Agromat can neither use them nor sell them to another customer. Legal title passes and the invoice is due on that date. Which analysis applies to the sale of the machines?Single choiceL3
- At 30 September 20X1, Ventis is analysing several deliveries of equipment. Which of the following situations indicate that the customer (or the third party) has not yet obtained control of the delivered equipment?Multiple choiceL3
- Hexagone Mobilier sells a set of showroom furniture to a hotel. The contract includes a clause under which Hexagone may repurchase the furniture at a later date. Legal title passes on delivery. What must Hexagone do to assess whether the hotel obtains control of the furniture?Single choiceL2
- Under IFRS 15, the decisive criterion for recognising revenue at a point in time is the transfer of the significant risks and rewards of ownership; the other indicators are merely secondary.True / falseL3
Measuring progress towards complete satisfaction21 questions
- For a single performance obligation satisfied over time, the entity may measure progress on part of the work using an output method and on the rest using an input method, and then add the results together.True / falseL2
- At the end of 20X2, Travaux Garance revises upwards the total expected costs of a construction project whose performance obligation is satisfied over time, following an unforeseen rise in material prices in 20X2 (new information, case data), which changes its progress. This update of the measure of progress is a change in accounting estimate under IAS 8.True / falseL3
- Which of the following measures is an output method?Single choiceL2
- Lumière Conseil measures progress on a consulting engagement satisfied over time by comparing the hours worked by its consultants with the total expected hours. What type of method is this?Single choiceL2
- Which of the following statements about choosing a method of measuring progress are correct?Multiple choiceL3
- Bâtisud is building a warehouse for a customer; the performance obligation is satisfied over time. The transaction price is …. Total expected costs amount to … and costs incurred at 31 December 20X1, the first reporting date, to …. Bâtisud has concluded that costs incurred faithfully depict its performance. Calculate the percentage of completion and the revenue for 20X1.CalculationL2Variant
- Software developer Ingésoft is building bespoke software for a mutual insurer, which controls the developments as they are made; the obligation is satisfied over time. The agreed fixed fee, the only component of the price, is …. The project's cost budget, considered reliable, is …. At 30 June 20X2, the first reporting date since the project started, Ingésoft has incurred … of costs, all reflecting its performance, and has invoiced … under the contractual schedule. Ingésoft measures progress using costs. What revenue does it recognise at that date?CalculationL3Variant
- Ponts Ravel is building a bridge for a local authority, an obligation satisfied over time and measured using costs incurred. Transaction price: …. Revenue recognised in 20X1: …. At 31 December 20X2, cumulative costs incurred amount to … and total expected costs are revised to …. Calculate the revenue for 20X2.CalculationL3Variant
- Kerlo shipyard is building a fishing vessel for a shipowner; the obligation is satisfied over time and progress is measured using costs. Fixed price: …. At the end of year 1, costs incurred are … out of total expected costs of …. At the end of year 2, cumulative costs reach … and total expected costs are increased to … following a rise in steel prices. Determine the revenue for year 1 and for year 2.CalculationL4Variant
- Hydrotech is building a pumping station, an obligation satisfied over time, for a price of …. At 31 December 20X1, four months after the start, the soil surveys are incomplete and Hydrotech cannot yet reasonably measure the outcome of the contract. It nevertheless expects to recover the costs incurred, which amount to …. It has invoiced an advance of …. What revenue does it recognise in 20X1?CalculationL3Variant
- Sylvae Conseil began, in November 20X2, an engagement to redesign a hospital's processes, satisfied over time, for a fee of …. At 31 December 20X2, the final scope has not been settled and the firm cannot reasonably measure the outcome of the engagement; it nevertheless expects to recover the costs incurred, that is …. Its usual target margin is …. What revenue does it recognise for 20X2?CalculationL3Variant
- Mécanique Orvault is manufacturing a special press in its customer's plant, and the customer controls the construction as it progresses; the obligation is satisfied over time and progress is measured using costs. Transaction price: …; total expected costs: …; costs incurred at 31 December 20X1: … (already recognised as expenses). Orvault can only invoice after final acceptance of the press. Record the revenue entry at 31 December 20X1.Journal entryL2Variant
- Solaris Énergie is installing a solar power plant on land owned by a municipality, which controls the plant as it is built. Fixed price: …; total expected costs, unchanged: …. At the end of 20X2, cumulative costs reach …; revenue recognised in 20X1 was …. The contract provides for a single invoice on commissioning. Record the revenue entry for 20X2 (progress measured using costs).Journal entryL3Variant
- Lumen Réseaux is upgrading a city's street lighting (obligation satisfied over time, price of 1,000,000, total expected costs of 800,000; progress measured using costs). At 31 December 20X1, costs incurred amount to 380,000, including 100,000 of light fittings purchased and stored in Lumen's warehouse, not yet installed; under the contract, the city will obtain control of them only when they are installed. What revenue does Lumen recognise at 31 December 20X1?Single choiceL4
- For a renovation contract of Atelier Corbel (price of 1,500,000, obligation satisfied over time, progress measured using costs), an accounting assistant prepared the following at 31 December 20X2: cumulative costs 900,000; total expected costs 1,200,000; progress 75%; cumulative revenue 1,125,000; revenue recognised in 20X2: 1,125,000. Revenue for 20X1 was 450,000. Where is the error?Single choiceL3
- Génie Civil Arvel is building a tunnel (price of 2,400,000, progress measured using costs). End of 20X1: costs incurred 500,000 out of total expected costs of 2,000,000, revenue recognised 600,000. End of 20X2: cumulative costs 1,500,000, total expected costs revised to 2,500,000 because the rock is harder than expected. The controller restates 20X1 (progress reduced to 20%, revenue 480,000) and recognises revenue of 960,000 in 20X2. Fact of the case: under IAS 8, the effect of a change in accounting estimate is recognised in the period of the change, without restating prior periods. Fact of the case: the provision for the onerous contract under IAS 37 is recognised separately and is not part of the question. What is the error?Single choiceL4
- Linéo is building four assembly lines in a manufacturer's plant, and the manufacturer controls the work in progress as it is performed; the contract is a single obligation satisfied over time. At 31 December 20X1, one line is complete and delivered, and two others are almost finished in the customer's plant. The finance director proposes measuring progress by lines delivered, that is 25%. What is your assessment?Single choiceL3
- An entity recognises revenue for an obligation satisfied over time only if it can reasonably measure its progress, which requires the reliable information needed to apply an appropriate method.True / falseL2
- Valdrôme Bâtiment is building a warehouse for a customer; the obligation is satisfied over time and progress is measured by costs incurred. Price: 1,000,000; total expected costs, excluding waste: 800,000. In 20X1, Valdrôme incurred costs of 300,000, of which 60,000 relate to concrete lost through an unexpected handling error, not reflected in the contract price (a significant loss, case datum). The accounting assistant computes progress of 300,000 / 800,000 = 37.5%. What is the error?Single choiceL3
- The consulting firm Orsenne Conseil assists a customer with the overhaul of its purchasing. The obligation is satisfied over time (case datum). Fees are 150 per hour worked, invoiced monthly, and Orsenne Conseil has established that this hourly rate corresponds directly to the value to the customer of the performance completed (documented analysis). During March 20X1, Orsenne Conseil worked 120 hours. How may Orsenne Conseil recognise revenue for March?Single choiceL3
- Hautvallon is renovating a customer's factory for a price of …; the obligation is satisfied over time and progress is measured by costs incurred (documented choice). Total expected costs amount to …, of which … for a cooling unit bought from a supplier, without significant involvement of Hautvallon in its design or manufacture. The customer obtains control of the unit as soon as it is delivered to the site in 20X1, well before its installation; the unit is not distinct, and its cost is significant relative to the total (case data). Hautvallon has concluded that recognising revenue equal to the cost of the unit best depicts its performance (judgement, case datum). At 31 December 20X1, in addition to the delivered unit, Hautvallon has incurred … of other costs. Compute the percentage of completion of the other work and the revenue recognised for the unit.CalculationL4
Costs to obtain and to fulfil a contract18 questions
- Orbis pays its salesperson a commission of 4,000 that is due only if the 3-year maintenance contract with a customer is signed. Orbis expects to recover this cost through the contract margins. The commission is recognised as an asset.True / falseL2
- To respond to a tender, Verdance incurs 7,000 of lawyer's fees for drafting its proposal; these fees are due whether or not the contract is won and cannot be recharged to the customer. Verdance wins the contract: it must recognise these fees as an asset.True / falseL2
- As a practical expedient, an entity may recognise the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that would otherwise have been recognised is one year or less.True / falseL3
- Fabrinox manufactures parts for a customer under contract; the costs of the parts held in inventory fall within IAS 2. Fabrinox must nevertheless apply the three IFRS 15 criteria for recognising costs to fulfil a contract as an asset to those costs.True / falseL3
- Pixelia, a communications agency, is analysing the costs related to signing a one-year contract with a customer. Which one is an incremental cost of obtaining the contract?Single choiceL2
- Before a remote monitoring contract starts, Hélionet sets up the platform that will be used to provide the service. Which of the following costs must be recognised as an expense when incurred, whatever the analysis of the other criteria?Single choiceL2
- Costs to fulfil a contract that are not within the scope of any other standard are recognised as an asset under IFRS 15. Which conditions must be met?Multiple choiceL3
- Ondéo Services is performing an IT outsourcing contract. Which of the following costs must be recognised as an expense when incurred?Multiple choiceL3
- Datavia signs a 3-year maintenance contract with a customer worth …. It pays its salesperson a commission of … of the value of contracts signed. Before signing, it incurred external legal fees of … and travel costs of …, which would have been incurred even without obtaining the contract. Datavia expects to recover its costs and does not apply the practical expedient. What amount does it recognise as an asset for the costs of obtaining the contract?CalculationL2Variant
- Telecoms operator Nordis Télécom wins a 4-year connectivity contract with a hotel chain for total consideration of …. An independent business introducer receives … of that consideration, payable only because the contract is concluded. Nordis also paid … to a consultant to prepare its bid, due whatever the outcome, and the fixed salary of its sales manager for the negotiation month amounts to …. Recovery of the costs is expected. What amount does Nordis recognise as an asset?CalculationL3Variant
- Cloudéa signs a 5-year managed hosting contract. Before the service starts, it carries out set-up work on its own platform that transfers no service to the customer but creates resources that will be used to provide the hosting (facts of the case); these costs are not within the scope of any other standard and are expected to be recovered. Costs incurred: labour of engineers assigned to the contract …; allocation of supervision relating directly to the contract …; head office administrative costs not chargeable …; rework of a faulty configuration, waste not reflected in the price …. What amount does Cloudéa recognise as an asset?CalculationL3Variant
- Logistics provider Logifret enters into a 6-year warehousing contract with a retailer. To prepare its warehouses, it incurs: set-up labour …; consumables used directly for the set-up …; an insurance premium taken out for this contract only …; purchase of racking, property, plant and equipment accounted for under IAS 16, …; non-chargeable overheads …. The set-up transfers no service to the customer, creates resources used for future services and its cost is recoverable (facts of the case). What amount does Logifret recognise as an asset for costs to fulfil the contract under IFRS 15?CalculationL3Variant
- Training provider Altiplan Formation signs a 2-year training contract on 1 March 20X1 for …. It owes an independent broker a commission of …, due solely because of the signing and payable the following month. Altiplan expects to recover this cost and does not apply the practical expedient. Record the entry on 1 March 20X1.Journal entryL2Variant
- Vélia Sécurité concludes a 3-year security services contract worth …. It immediately pays its saleswoman, by bank transfer, a bonus of … of that value, due solely because of the signing. Vélia expects to recover this cost; as the amortisation period exceeds one year, the practical expedient is not applicable. Record the entry for the bonus.Journal entryL2Variant
- Rapidéco signs a 9-month event organisation contract and pays its salesperson a commission of 2,500 linked to the signing. The related asset, if recognised, would be amortised over those 9 months. What treatment does IFRS 15 permit?Single choiceL2
- To enter a new market, Belvue Ingénierie has accepted a fixed-price contract whose expected consideration will not cover the expected fulfilment costs. It pays its salesperson a commission of 15,000 linked to the signing. Management has concluded, on the basis of its budgets (fact of the case), that it does not expect to recover this commission. Fact of the case: the provision for the onerous contract under IAS 37 is recognised separately and is not part of the question. What treatment applies?Single choiceL3
- Bâtiplus is performing a contract with two performance obligations: the structural work phase, already satisfied and accepted in March 20X1, and the finishing work phase, in progress. In June 20X1, it incurs 14,000 of rework on the structural work and 6,000 of site costs for which it cannot determine whether they relate to one phase or the other. What treatment applies to these two amounts?Single choiceL3
- In November 20X1, Médisoft incurs 22,000 of direct labour to design the configurations that will be used to operate the information system of a specifically identified hospital, with which a 4-year services contract is expected to be signed in January 20X2. The configurations will be used to provide the future services, these costs are not within the scope of any other standard and Médisoft expects to recover them (facts of the case). How should these 22,000 be treated at 31 December 20X1?Single choiceL3
Amortisation and impairment of contract cost assets10 questions
- Valdrome amortises an asset recognised from the costs of obtaining a contract. During the second year, it finds that the expected timing of transfer of the services to the customer has changed significantly. It must restate the amortisation of prior periods in the same way as an error is corrected.True / falseL2
- Ardelis pays its salesperson a commission of 6,000 on signing a 2-year maintenance contract. Based on its history, Ardelis has specifically identified an anticipated renewal for 2 additional years, for which no commission will be paid. The services are provided evenly and the commission meets the conditions for recognition as an asset. Over what period is the asset amortised?Single choiceL2
- Brenval pays a commission of … to a business introducer to obtain an IT hosting contract with a term of … years. Brenval has specifically identified an anticipated renewal with a term of … year, for which no commission will be due. The service is provided evenly over time; Brenval therefore uses straight-line amortisation. Calculate the annual amortisation charge of the asset recognised from the costs of obtaining the contract.CalculationL2Variant
- On 1 April 20X1, Corvelle signs a remote monitoring subscription of … months and pays its sales agent a commission of …, recognised as an asset. Corvelle anticipates a specifically identified extension of … months, with no new commission. The service is provided evenly every month. Corvelle's reporting date is 31 December. What is the amortisation expense of this asset for the year 20X1?CalculationL3Variant
- At 31 December 20X1, Doravel holds an asset recognised from the costs to fulfil a software development contract, with a carrying amount of …. It still expects to receive … for the services to which this asset relates. The costs that relate directly to providing those services and have not yet been recognised as expenses are estimated at …. Calculate the impairment loss to be recognised.CalculationL2Variant
- Estenor has recognised as an asset the set-up costs of a logistics contract; at 31 December 20X2, their carrying amount is …. For the services still to be provided, Estenor still expects a fixed fee of … and a performance bonus whose most likely amount is estimated at …; this bonus is excluded from the transaction price because of the constraint on variable consideration. Given the customer's credit risk, Estenor estimates that it will not recover … of this consideration. The costs that relate directly to the remaining services and have not yet been recognised as expenses amount to …. Calculate the impairment loss on the asset.CalculationL3Variant
- On 1 January 20X1, Fenmore recognised as an asset a commission of … paid to obtain an industrial cleaning contract with a term of … years; no renewal is anticipated. The services are provided evenly over the whole term. Record the amortisation entry at 31 December 20X1.Journal entryL2Variant
- Galvora has recognised as an asset … of set-up costs for a production line dedicated to a customer. These costs relate to the … components to be delivered under the current contract and a specifically identified anticipated contract. Galvora judges that amortisation based on the units delivered reflects the pattern of transfer of the components to the customer. In 20X1, … components are delivered. Record the amortisation entry for 20X1.Journal entryL3Variant
- Iselor recognised as an asset a commission of 24,000, amortised on a straight-line basis over 4 years from 1 January 20X1. At the end of 20X1, after amortisation of 6,000, it reduced the asset from 18,000 to 12,000 through an impairment loss of 6,000. In 20X2, amortisation is 4,000 (12,000 spread over 3 years) and the carrying amount reaches 8,000. At the end of 20X2, the impairment conditions have clearly improved: the remaining expected consideration, less the directly related costs not yet recognised as expenses, amounts to 20,000. What reversal does Iselor recognise in profit or loss?Single choiceL3
- Hautvallon tests for impairment an asset recognised from the costs to fulfil a services contract. Which statements about this test are correct?Multiple choiceL3
Contract assets, contract liabilities and receivables14 questions
- On 15 January 20X1, Jarnac receives from a customer an advance payment of 20,000 for equipment that will only be delivered in March. On the date it receives the advance, Jarnac presents a contract liability.True / falseL1
- Kervian has completed the first phase of a project and recognised the related revenue. Under the contract, it can only invoice this phase after completing the second one. Kervian presents its right to consideration for the first phase as a receivable.True / falseL1
- Under IFRS 15, what is a receivable?Single choiceL1
- Lormel sells two machines to a customer for 80,000; each machine is a separate performance obligation, to which a price of 40,000 is allocated. Payment only becomes due after delivery of the second machine. At 30 June 20X1, only the first machine has been delivered and Lormel has recognised revenue of 40,000. How does it present its right at that date?Single choiceL2
- The chief financial officer of Montbrel is preparing the presentation of balances arising from contracts with customers. Which statements are correct?Multiple choiceL2
- Mirabel is building a warehouse for a customer; the performance obligation is satisfied over time. At 31 December 20X1, cumulative revenue recognised since inception amounts to …. The amounts invoiced to the customer, all of which have become due and are presented as receivables, total …. Mirabel has no other contract with this customer. Calculate the contract asset balance at 31 December 20X1.CalculationL2Variant
- Norvane is developing bespoke software for a hospital under a performance obligation satisfied over time. The contract provides for milestone payments made in advance. At 31 December 20X2, Norvane has collected a total of … and no other amount is due; revenue recognised since the start of the contract reaches …. What net contract balance does Norvane present in its statement of financial position at that date?CalculationL3Variant
- On 1 March 20X1, Orvault, a seminar organiser, collects … paid in advance by a customer for a seminar to be held in June 20X1. Record the entry on 1 March 20X1.Journal entryL1Variant
- On 10 September 20X2, Pellevoisin, an office furniture manufacturer, accepts an order of … and receives on the same day a deposit of …% of that amount. The furniture will be delivered, and control transferred to the customer, in November 20X2. Record the entry on 10 September 20X2.Journal entryL2Variant
- Quernel has installed at a customer's premises the first module of its security system and presents a contract asset of … for it, as the contract only allows it to invoice this module after installing the second one. On 20 May 20X1, the second module is installed: Quernel issues the invoice, payable within 30 days, and no condition other than the passage of time affects this amount any longer. Record the entry for the first module on 20 May 20X1.Journal entryL2Variant
- The engineering firm Rivadour performs an engineering assignment satisfied over time. The contract makes the invoicing of each phase subject to the approval of the deliverables by the customer's engineer. At 30 September 20X2, Rivadour presents a contract asset of … for phase 2, completed but not yet approved. On 5 October 20X2, the engineer approves the deliverables: the amount becomes billable and is only subject to a payment period. Record the entry on 5 October 20X2.Journal entryL2Variant
- Saulmont sells equipment and its installation for 50,000. Two performance obligations are identified: the equipment (allocated price 35,000), handed over to the customer on 31 March 20X1, and the installation (allocated price 15,000), planned for May. The customer paid 10,000 on signing; the balance of 40,000 will only be due on completion of the installation. At 31 March 20X1, after handing over the equipment, what balance does Saulmont present for this contract?Single choiceL3
- Tarvel has entered into two separate contracts with the same customer, which do not meet the conditions to be combined. At 31 December 20X1, the maintenance contract shows a contract asset of 12,000; the training contract, paid in advance, shows a contract liability of 8,000. Case data: the presentation adopted by Tarvel does not offset balances arising from different contracts against each other. How does Tarvel present these balances in its statement of financial position?Single choiceL3
- Ubrac delivers goods and recognises revenue of 50,000; its right to consideration is unconditional. Under IFRS 9 (case data, not tested here), the receivable is measured at 49,200 on initial recognition. How does Ubrac treat the difference of 800?Single choiceL3
Disclosures19 questions
- The Quintal group earns revenue from contracts with customers and rentals received as a lessor; these two sources are not presented separately in the statement of comprehensive income. Quintal must disclose in the notes the revenue from contracts with customers separately from its other sources of revenue.True / falseL2
- Rivolex does not present separately, in the statement of comprehensive income, the impairment losses on receivables and contract assets arising from its contracts with customers. In the notes, it may group them with the impairment losses on its other contracts, without distinction.True / falseL2
- What is the objective of disaggregating revenue from contracts with customers?Single choiceL2
- Sondral is preparing the note disaggregating its revenue. Which items must it consider or may it use to choose its categories?Multiple choiceL3
- The Tavernel group applies IFRS 8 and presents three segments based on regions. Its note disaggregating revenue, prepared in accordance with paragraph 114, uses product lines that do not match those segments. What does IFRS 15 require?Single choiceL3
- Ulmera, which does not present or disclose these amounts elsewhere, must disclose the opening and closing balances of its receivables, contract assets and contract liabilities from contracts with customers.True / falseL2
- At 1 January 20X2, Velorin's contract liability amounts to 80,000. In 20X2, Velorin receives new advances of 120,000 and recognises total revenue of 900,000. Of this revenue, 65,000 relates to performance covered by the opening contract liability and 70,000 to performance covered by advances received during the year. What amount does Velorin disclose as revenue of the period that was included in the contract liability at the beginning of the period?Single choiceL3
- Wendal completed the construction of a structure in 20X1, a performance obligation fully satisfied at the end of 20X1; the completion bonus had been neither invoiced nor collected. In 20X2, the uncertainty over a completion bonus is resolved and Wendal recognises additional revenue of 30,000 (case data). What information does Wendal give about this amount in its 20X2 notes?Single choiceL3
- The contract assets and contract liabilities of the Xantis group changed significantly in 20X2. Which items are examples of expected explanations of these significant changes?Multiple choiceL3
- Yselis operates an online marketplace and acts as an agent for part of the sales made on its platform. In the description of its performance obligations, it need not highlight the cases in which it acts as an agent.True / falseL2
- On 1 January 20X1, Zephal signs a 3-year maintenance contract for a transaction price of 900,000; the performance obligation is satisfied over time and evenly. At 31 December 20X1, Zephal has recognised revenue of 300,000 and expects to recognise 300,000 in 20X2 and 300,000 in 20X3. What information does Zephal give on the remaining performance obligations?Single choiceL3
- At 31 December 20X1, Abrenne has three contracts in progress. Contract 1: original expected duration of 10 months, remaining transaction price to be recognised 50,000. Contract 2: duration of 3 years, remaining transaction price 400,000. Contract 3: duration of 2 years, remaining transaction price 120,000; a potential bonus of 30,000 is excluded from it because of the constraint on variable consideration. Abrenne elects to apply the practical expedient that allows the information to be omitted for contracts with an original expected duration of one year or less. What information does it give on the transaction price allocated to the remaining performance obligations?Single choiceL4
- Brivail is considering the extent of the judgements to be disclosed for its contracts with customers. Which statement is correct?Single choiceL3
- Calmeyre carries out construction projects whose performance obligations are satisfied over time; it measures progress using an input method (costs incurred). In its notes, it must describe this method and explain why it provides a faithful depiction of the transfer of goods or services to the customer.True / falseL3
- Dauphal sells industrial ovens; each performance obligation is satisfied at a point in time. An acceptance clause makes it difficult to assess when the customer obtains control: on shipment or after on-site testing. What information must Dauphal give on this matter?Single choiceL3
- Elvinor grants volume rebates, sells bundled offers and accepts returns. For which matters must it disclose the methods, inputs and assumptions used?Multiple choiceL3
- Fontebrune has recognised as assets sales commissions and set-up costs relating to its contracts with customers. Which set of information must it give about these assets?Single choiceL3
- Gardenne elects to recognise as an expense when incurred the incremental costs of obtaining contracts whose asset would have been amortised over one year or less. As this choice is merely a practical expedient, Gardenne need not mention it in its notes.True / falseL2
- The Hermanel group sells laboratory equipment and multi-year maintenance contracts. Its investor presentations analyse revenue by product line (equipment, maintenance) and by region (Europe, North America). Its chief operating decision maker monitors the performance of two segments based on these regions, and Hermanel applies IFRS 8. The group has about 400 active contracts. Which note disaggregating revenue is most appropriate?Single choiceL4
Sale with a right of return16 questions
- Ombrelle sells lamps with a 30-day right of return. It recognises revenue for the full invoiced price and recognises an expense for a provision covering the expected returns. This treatment complies with IFRS 15.True / falseL2
- At each reporting date, Pervenche updates its estimate of the expected returns on its shoe sales; the resulting adjustment to the refund liability is recognised as revenue or as a reduction of revenue.True / falseL2
- Calisse sells 500 coffee makers with a 60-day right of return and expects some of them to be returned. What does it recognise when control of the coffee makers is transferred to the customers?Single choiceL2
- Which of the following statements about sales with a right of return are correct?Multiple choiceL3
- On 15 June 20X1, Vélinor sells … scooters for cash at a unit price of …. Customers have a 30-day right of return with a full refund. Based on its history, Vélinor estimates that … of the scooters will be returned; according to the case data, it is highly probable that this estimate will not result in a significant reversal of the revenue recognised. Calculate the revenue and the refund liability to be recognised at the date of sale.CalculationL2Variant
- In March 20X2, the online retailer Marelia ships … jackets sold at … each and paid on ordering. Customers may send the jackets back within 14 days for a refund. Using the previous season's statistics, customer service forecasts that … jackets will be returned; management considers, based on the case data, that this forecast meets the constraint on variable consideration. What amounts of revenue and refund liability does Marelia recognise on delivery?CalculationL3Variant
- In December 20X1, Ardélie sells 1,000 kitchen robots at a unit price of …, with a 90-day right of return. At the date of sale, it expects … robots to be returned and recognises the corresponding refund liability. At 31 December 20X1, the reporting date, … robots have been returned and refunded; Ardélie revises its estimate and now expects only … further robots to be returned. Calculate the refund liability at the reporting date and the adjustment to revenue (the asset for the right to recover the products is not dealt with here).CalculationL3Variant
- In October 20X2, the board game publisher Lumbra delivers … game boxes to shops at a unit price of …; the shops may return unsold boxes until 31 March 20X3 for a refund. On delivery, Lumbra estimated returns at … of the boxes. At 31 December 20X2, the reporting date, no box has yet been returned, but as in-store sales are disappointing, Lumbra raises its estimate to …. Calculate the refund liability at the reporting date and the reduction in revenue to be recognised.CalculationL3Variant
- On 1 September 20X1, Tissange sells … duvets for cash at a unit price of …, with a 30-day right of return. The unit cost of the duvets in inventory is …. Tissange expects … duvets to be returned, an estimate which, according to the case data, meets the constraint on variable consideration. The asset for the right to recover the products is measured, according to the case data, at …. Record the entries for the sale.Journal entryL2Variant
- On 20 April 20X2, the garden products wholesaler Brindal delivers … watering cans to a garden centre, invoiced at … each and payable in 60 days; the garden centre may return the cans within 45 days in exchange for a credit. The cans were held in inventory at a unit cost of …. Brindal forecasts that … cans will be returned (an estimate consistent with the constraint on variable consideration according to the case data) and measures the asset for the right to recover the products at …, an amount given by the case. Record the delivery.Journal entryL3Variant
- When reviewing the 20X1 financial statements of Solvane, which sells cosmetics with a 60-day right of return, you note that December sales of 80,000 were recognised in full as revenue and that a provision of 4,000 was recognised as an expense for the expected returns. Returned products are put back on sale. What correction do you propose?Single choiceL3
- Caldera sells drills with a right of return. For the quarter's sales, it correctly excluded expected returns from revenue and recognised a refund liability of 9,000. However, it removed all the drills delivered from inventory, at a carrying amount of 150,000, and charged them to cost of sales. According to the case data, the asset for the right to recover the drills expected to be returned amounts to 6,000. What correction is needed?Single choiceL3
- Sorbelle had recognised a refund liability of 15,000 for the expected returns on its November 20X1 sales. At 31 December 20X1, the reporting date, no return has occurred and Sorbelle revises its estimate: the liability required is now only 9,000. How does it account for the difference?Single choiceL3
- Bruyère sells hiking backpacks with a 60-day right of return. Its management controller proposes to treat the promise to stand ready to take back the backpacks during those 60 days as a separate performance obligation, to which part of the transaction price would be allocated. This analysis complies with IFRS 15.True / falseL2
- Altimètre sells tents with a right of return. At the date of sale, it estimates (case data) that … tents will be returned. The carrying amount of each tent in inventory before the sale was EUR …. Altimètre expects to incur recovery costs of EUR … in total to take back those tents and estimates that each returned tent will lose EUR … of value to it. Calculate the amount of the asset for the right to recover the products.CalculationL2Variant
- The online shop Mailles Fines sells … sweaters at EUR … each; each sweater was carried in inventory at EUR …. Customers may send a sweater back for a refund, or exchange it for the same model in another size, at the same price and in the same condition. Based on its history (case data, returns constrained in accordance with the variable consideration requirements), Mailles Fines expects … sweaters to be sent back, of which … for a mere size exchange. For each refunded sweater, it expects a recovery cost of EUR … and a total decrease in value of EUR … across all the refunded sweaters (costs relating to exchanges are ignored for this exercise — teaching assumption). Calculate revenue, the refund liability and the asset for the right to recover the products.CalculationL3Variant
Assurance-type and service-type warranties15 questions
- Ferrane sells boilers with a two-year warranty required by law. The fact that this warranty is required by law is an indication that it is not a performance obligation.True / falseL2
- The longer the coverage period of a warranty, the less likely it is that the warranty provides a service in addition to the assurance that the product complies with agreed-upon specifications.True / falseL2
- In assessing whether a warranty provides a service in addition to the assurance of compliance with agreed-upon specifications, which of the following makes such a service more likely?Single choiceL2
- Hydrelle sells heat pumps with a warranty. Which of the following are indications that this warranty only provides assurance that the pumps comply with agreed-upon specifications?Multiple choiceL3
- Ventamar sells electric bicycles. All bicycles come with the two-year legal warranty covering compliance defects. For its top-of-the-range model, Ventamar also grants six-year coverage including a full annual service and the replacement of wear parts. Which analysis complies with IFRS 15?Single choiceL3
- Thermaline sells a restaurant, for a total price of …, a professional coffee machine and a three-year extended warranty including quarterly preventive maintenance. After analysing the relevant factors, Thermaline concluded (conclusion given by the case) that the extension provides a service in addition to the assurance of compliance and is a performance obligation separate from the machine. The observed stand-alone selling prices are … for the machine and … for the extended warranty. Allocate the transaction price.CalculationL3
- Sablier sells diving watches. Its customers may, if they wish, purchase separately a 3-year extended warranty offered at a separate price. When a customer buys a watch with that extension, the extension is a performance obligation to which Sablier allocates part of the transaction price.True / falseL2
- Vélo Ardent grants on each bicycle a 2-year warranty covering manufacturing defects. The warranty cannot be purchased separately and only provides assurance that the bicycle complies with the agreed specifications. How does Vélo Ardent account for this warranty?Single choiceL2
- Robotique Vernier sells household robots. Which of the following promises made to its customers do NOT create a performance obligation?Multiple choiceL3
- Torréfacteur Brun sells a professional coffee machine with a 3-year extended warranty for a total price of EUR …. It also sells the machine separately, at a stand-alone selling price of EUR …, and the extended warranty, at a stand-alone selling price of EUR … (case data). Calculate the share of the transaction price allocated to the extended warranty and the share allocated to the machine.CalculationL2Variant
- Imprimerie Lagune buys from Encre Vive an industrial printer for a total price of EUR …. The price covers: the printer, with the 1-year statutory warranty of conformity, which cannot be purchased separately and only provides assurance that the printer complies with agreed specifications; and a 2-year extended warranty, which Encre Vive also sells separately. The stand-alone selling prices are EUR … for the printer and EUR … for the extension (case data). Calculate the share of the transaction price allocated to the extended warranty and the share allocated to the printer.CalculationL3Variant
- Chaudières Brasier installs boilers with a 5-year warranty that is not sold separately. The warranty provides assurance of the boiler's compliance and also includes an annual preventive visit, which is a service in addition to the assurance of compliance. The two parts are so intertwined that Chaudières Brasier cannot reasonably account for them separately (case data). Which treatment should be applied?Single choiceL3
- Climatiseurs Boréal sells air conditioners with a warranty, not sold separately, that has two parts: an assurance of compliance for 1 year and a technical assistance service for 4 years, which goes beyond that assurance. Climatiseurs Boréal can reasonably account for the two parts separately (case data). What is the appropriate treatment?Single choiceL3
- Électroménager Saule sells washing machines with the 2-year warranty required by the law of its country, which cannot be purchased separately. Saule also undertakes to bear the cost of shipping any defective appliance back to its workshop during that period. No other service is promised. Its analyst concludes that the warranty and the shipping promise only provide assurance of compliance. Which treatment follows?Single choiceL3
- Logiciels Sentinelle sells security units and contractually undertakes to indemnify its customers if a third party sues them for infringement of a trademark or patent used in the units. This promise of indemnification is a performance obligation to which Sentinelle must allocate part of the transaction price.True / falseL3
Principal versus agent considerations17 questions
- Pivoine buys show tickets and immediately resells them to its customers; it holds legal title to them only for an instant before they are transferred to the customer. This momentary legal title alone is enough to establish that it acts as a principal.True / falseL2
- Within a single contract with a customer, an entity may act as a principal for some specified goods or services and as an agent for others.True / falseL2
- Orcival can conclude that it controls a specified service before it is transferred to the customer only if three indicators are all present: primary responsibility for fulfilment, inventory risk and discretion in establishing the price.True / falseL3
- Navigo arranges airport transfers for its customers, performed by taxi companies. Based on the case data, it has concluded that it acts as an agent. How does it recognise its revenue?Single choiceL2
- Which of the following is not one of the indicators cited by IFRS 15 to show that an entity controls a specified good or service before it is transferred to the customer?Single choiceL3
- Arvel involves third parties in its contracts with customers. In which of the following situations does Arvel control the specified good or service before it is transferred to the customer?Multiple choiceL3
- The booking platform Hôtelia connects travellers with hotels. Based on the case data, it has concluded that it does not control the room nights before they are transferred to the travellers and that it acts as an agent. In 20X1, travellers pay … for room nights through the platform, of which Hôtelia remits … to the hotels. What revenue does Hôtelia recognise for 20X1?CalculationL2Variant
- The online marketplace Artisane hosts jewellery designers who set their own prices, hold their own inventory and ship their orders; Artisane collects the price and deducts a commission of … on each sale. According to the analysis given by the case, Artisane does not control the jewellery before it is transferred. During May 20X1, the sales made by the designers on the marketplace amount to …. What revenue does Artisane recognise for May 20X1?CalculationL3Variant
- Ébénis, a distributor of office furniture, buys chairs from a manufacturer, stores them in its warehouses, sets their selling price freely and is solely answerable to its customers for their compliance. It has concluded that it acts as a principal. In 20X1, it sells … chairs at a unit price of …; it bought them at … each. What revenue does Ébénis recognise?CalculationL2Variant
- Festivo organises a music festival in July 20X2: it rents the site, hires the artists for a fixed fee, alone sets the ticket price, bears the risk of unsold places and is answerable to the public for how the festival runs. According to the analysis given by the case, Festivo acts as a principal for access to the festival. It sells … tickets at a price of … and pays a total of … to the artists and the site owner. What revenue does Festivo recognise?CalculationL3Variant
- The travel agency Voyagis acts as an agent (conclusion given by the case) for the sale of tours organised by a tour operator. On 3 May 20X1, it collects … from a customer for a tour and must pass … on to the tour operator. According to the case data, Voyagis's obligation, arranging for the tour operator to provide the tour, is satisfied on that date. Record Voyagis's entry on 3 May 20X1.Journal entryL2Variant
- The website Ludiboutique sells games online that are shipped directly by publishers, which set their price and handle delivery and after-sales service. Ludiboutique earns a commission of … of the selling price and has concluded, according to the case data, that it acts as an agent for these games. In June 20X2, it collects … from buyers for games delivered during the month. Record the summary entry for June 20X2.Journal entryL3Variant
- The platform Domicilia offers gardening work performed by independent gardeners. Each gardener sets their own rate, accepts or refuses jobs and is solely answerable for the quality of their work; Domicilia makes no commitment to the customer to perform the work and holds no inventory. Domicilia collects the price, bears the risk of non-payment and passes 85% of the price on to the gardener. What conclusion should be reached?Single choiceL3
- The tour operator Escalis buys 200 seats on charter flights at the start of the season, non-refundable and non-cancellable, which it then resells to travellers at a price it sets freely. Unsold seats remain at its cost, and it handles travellers' requests itself. The airline operates the aircraft and performs the flight. What analysis should be adopted for the seats sold?Single choiceL3
- Construa undertakes to deliver to a hospital an operational air-conditioning system that meets a specification. It buys the chillers and ducts from suppliers, has the installation performed by a subcontractor that it directs and provides the engineering that integrates everything into a single system. The price invoiced to the hospital is 2,400,000; the purchases and subcontracting cost 1,900,000. What analysis should be adopted?Single choiceL4
- Tessel had entered into a two-year maintenance contract with a customer. Halfway through, with the customer's agreement, Prima assumes all of Tessel's performance obligations and contractual rights, and Tessel is no longer obliged to provide the maintenance. Prima pays Tessel a fee for having brought it this contract. How does Tessel analyse the remainder of the contract?Single choiceL3
- Netalis sells annual office-cleaning contracts to businesses. It commits to its customers to a level of quality, alone sets the prices and has the services performed by subcontractors that it selects and on which it imposes schedules, procedures and work sites; if a subcontractor fails, it must send another team at its own cost. Netalis holds no inventory. Its chief financial officer proposes to recognise only the margin, on the grounds that Netalis employs no cleaning staff. Write a memo concluding on the role of Netalis and on the amount of revenue.JudgmentL4
Customer options for additional goods or services14 questions
- Any option allowing the customer to acquire additional goods at a discount is a performance obligation, whatever the level of that discount.True / falseL2
- When an option provides a material right, the customer in effect pays in advance for future goods or services; the related revenue is recognised when those goods or services are transferred or when the option expires.True / falseL2
- When the stand-alone selling price of an option providing a material right is not directly observable, the entity estimates it from the discount the customer would obtain when exercising the option, adjusted for the discount it could obtain without exercising it and for the likelihood of exercise.True / falseL3
- Pastelle sells annual subscriptions to its painting workshops. In which of the following cases does the subscription provide the customer with a material right?Single choiceL2
- Clarivia sells annual lift maintenance contracts. Each customer may renew its contract for two further years on the same terms, whereas the rates offered to new customers are rising significantly. According to the case data, the renewal option provides a material right. What possibility does IFRS 15 give Clarivia for allocating the price?Single choiceL3
- Which of the following statements about options to acquire additional goods or services are correct?Multiple choiceL3
- Lunetta, an optician, gives each buyer of glasses a voucher for … off a future purchase, valid for six months. According to the case data: the average amount of a future purchase is …; any customer can obtain a seasonal discount of … without the voucher; Lunetta estimates the likelihood that the voucher will be used at …. The voucher provides a material right and its stand-alone selling price is not observable. Estimate the stand-alone selling price of one voucher.CalculationL3Variant
- In November 20X1, the furniture store Boisdoré hands … coupons to buyers of sofas; each coupon gives … off a next furniture purchase. According to the case data, the average next purchase is estimated at …, any customer receives a usual discount of … without a coupon and the likelihood that a coupon will be used is …. The coupons provide a material right. Calculate the estimated stand-alone selling price of one coupon, then of all the coupons.CalculationL3Variant
- Orbelle sells a robot vacuum cleaner at a price of …, which matches its stand-alone selling price of …. With each vacuum cleaner, it gives a voucher providing a material right on its accessories, whose stand-alone selling price has been estimated at …. Allocate the transaction price between the vacuum cleaner and the voucher, and state when the amount allocated to the voucher will be recognised as revenue.CalculationL4Variant
- During a December 20X2 promotion, the retailer Sonalis sells … headsets at a unit price of …, equal to their stand-alone selling price. Each buyer receives a purchase voucher which, according to the analysis given by the case, provides a material right; the stand-alone selling price of all the vouchers, which is not observable, is estimated at … after taking into account the likelihood of use. Allocate the total transaction price between the headsets and the vouchers.CalculationL4Variant
- Brasaro sells espresso machines and gives each buyer a card offering 10% off capsules for one year. The same 10% discount is granted to anyone who joins the brand's club free of charge, without buying a machine. How does Brasaro account for the card given with the machine?Single choiceL3
- On its 20X1 sales, Velya allocated 9,600 to purchase vouchers providing a material right, valid until 30 June 20X2; this amount, paid by customers before the future goods are provided, is presented as a contract liability. The vouchers used gave rise to the recognition of the corresponding revenue when the items were delivered. On 30 June 20X2, all the remaining vouchers expire unused; 2,400 remains in the contract liability for them. How should this balance be treated?Single choiceL3
- Mirabel's analyst estimated the stand-alone selling price of a 30% discount voucher by multiplying that rate by the average amount of future purchases, 600, giving 180. According to the case data, any customer obtains a discount of 5% without a voucher and the likelihood that the voucher will be used is 70%. The voucher provides a material right and its price is not observable. Which estimate complies with IFRS 15?Single choiceL4
- Ébène et Fils sells a dining table for EUR 2,400. The contract gives the customer the option to buy, within 12 months, matching chairs at EUR 150 each. That price is the one at which Ébène et Fils sells those chairs to any customer, without conditions (case data: it reflects the stand-alone selling price of the chairs). The offer is, however, available only to buyers of the table. How should this option be treated?Single choiceL3
Unexercised rights and non-refundable upfront fees12 questions
- On 15 November 20X1, the caterer Saveurs de Loire receives a non-refundable deposit of EUR 4,000 for a banquet scheduled on 20 January 20X2. True or false: because the deposit is non-refundable, the caterer recognises revenue of EUR 4,000 in its 20X1 financial statements.True / falseL2
- The bookshop Page Blanche sells non-refundable gift cards that can be exchanged for books. True or false: the payment received gives the customer a right to future goods, and part of those rights may never be exercised; these unexercised rights are commonly referred to as breakage.True / falseL2
- The Azur sports club charges each new member a non-refundable registration fee of EUR 250, in addition to a monthly subscription of EUR 40. Registration involves opening a file and handing over a badge, without any service yet being provided to the member. How does the club account for the registration fee?Single choiceL3
- Hydrolis, which installs and maintains water fountains in offices, charges its customers non-refundable upfront fees when contracts are signed. Which of the following statements are correct?Multiple choiceL3
- On 1 September 20X1, the Lotus studio sells a non-refundable book of … yoga sessions for …, collected the same day. At 31 December 20X1, the customer has attended … sessions. The studio expects all sessions to be used (case data) and all sessions have the same value (teaching assumption). Determine the 20X1 revenue and the contract liability at 31 December 20X1.CalculationL2Variant
- On 1 October 20X1, the software publisher Formatech collects a non-refundable prepayment of … for a package of … training days, which the customer company schedules freely over eighteen months. At the 31 December 20X1 year end, … days have been delivered. Formatech expects the package to be used in full (case data); each day has the same value (teaching assumption). Calculate the revenue to be recognised in 20X1 and the contract liability balance at year end.CalculationL2Variant
- On 1 January 20X1, the publisher Horizon Voile collects an annual subscription of … entitling the subscriber to … monthly issues of its magazine; the receipt was recorded as a contract liability. At the end of May 20X1, … issues have been delivered to the subscriber; all issues have the same value (teaching assumption). Record the entry recognising the revenue for the issues delivered.Journal entryL2Variant
- Under a supply contract, the engineering workshop Ferrand received from an industrial customer an advance payment of … covering … identical spare parts deliverable on demand; this payment is shown as a contract liability. During the quarter, Ferrand delivers … parts, of which the customer obtains control on receipt (case data). Record the entry relating to these deliveries.Journal entryL2Variant
- Nuvola signs a 24-month data hosting contract with a customer, for a monthly fee of EUR 1,000, and charges a non-refundable set-up fee of EUR 6,000. The set-up consists of internal configuration tasks that transfer no good or service to the customer. The contract may then be renewed each year at the same monthly fee, without any new set-up fee; Nuvola has concluded (professional judgement) that this renewal option provides the customer with a material right. How does Nuvola account for the set-up fee?Single choiceL3
- Thermes d'Argile sells non-refundable prepaid vouchers for treatments in 20X1 for EUR …. Based on its experience with comparable vouchers (case data), the entity expects rights of EUR … never to be exercised and concludes, after considering the constraint on estimates of variable consideration, that it expects to be entitled to that amount. In 20X1, customers use vouchers for EUR … of treatments. No amount must be remitted to a third party. Calculate revenue for 20X1 and the contract liability at the end of 20X1.CalculationL3
- The bookshop chain Bons Lumière sells gift cards. In the region where it operates, an unclaimed property law requires it to remit to the public authority the balance of cards that remain unused at expiry (case data). Bons Lumière expects balances of EUR 4,000 never to be used. How does it account for this amount?Single choiceL2
- Nuage Clair enters into a 3-year IT hosting contract and charges non-refundable upfront fees of EUR 30,000, intended, among other things, to cover its set-up costs of EUR 18,000 (migrating the data onto its own servers). Its analysis, not challenged here, concludes that these set-up activities transfer no service to the customer and satisfy no performance obligation. The hosting service is satisfied over time, and progress is measured on the basis of costs incurred (input method, a choice of the case). Which treatment is appropriate?Single choiceL3
Licences of intellectual property14 questions
- Mélodia grants a hotel chain a distinct licence over its music catalogue, limited to France, to a three-year term and to playback in common areas. True or false: these restrictions of time, geographical region and use are not taken into account in determining whether the licence provides a right to access or a right to use.True / falseL3
- Brevalis grants a distinct licence to use a process patent; it guarantees to the licensee that the patent is valid and undertakes to defend it against infringement. True or false: this commitment to defend the patent is enough to make the licence a right to access, with revenue recognised over time.True / falseL3
- Codexa grants a customer a distinct three-year licence over design software with significant stand-alone functionality, for a fixed price of EUR 360,000. Codexa has planned no updates and the customer expects no activities from it on the software (case data). The contract is signed on 15 December 20X1, the code is delivered on 20 December 20X1 and the licence period starts on 1 January 20X2. When does Codexa recognise the revenue of EUR 360,000?Single choiceL3
- Fournil d'Or, a bakery chain, grants a franchisee the right to operate under its brand for five years and in a single region, in exchange for a fixed initial fee. As it customarily does, Fournil d'Or will continue to run advertising campaigns, develop its recipes and manage the brand image. The value of the brand to the franchisee substantially depends on these activities, which directly expose it to their effects without transferring any good or service to it (case data). The licence is distinct. How is the initial fee recognised?Single choiceL3
- Ludivers grants a distinct licence over a video game character. To conclude that its promise is to provide a right to access the intellectual property, which conditions must be met?Multiple choiceL3
- Thermio sells connected thermostats. Each device embeds firmware that Thermio licenses to the customer; without this firmware, the thermostat performs no function, and the customer can only benefit from the licence through the device (case data). How does Thermio identify the performance obligations?Single choiceL3
- On 1 January 20X1, the publisher Mirabelle grants a foreign publisher a licence to translate and publish a novel, analysed as a right to use transferred at that date (conclusion given by the case). In return, the foreign publisher only pays a royalty of … of its sales of the novel. Its 20X1 sales amount to … and it forecasts sales of … in 20X2. Calculate the royalty revenue recognised by Mirabelle in 20X1.CalculationL3Variant
- The Kerval studio grants a download platform a four-year licence over its catalogue of recordings, transferred at the start of 20X1 and analysed as a right to use (conclusion given by the case). The platform's only consideration is … per track downloaded by its subscribers. In 20X1, … downloads took place; the platform estimates the total number of downloads over the four years at …. What revenue does Kerval recognise in 20X1?CalculationL3Variant
- The Solvane laboratory grants a manufacturer a five-year licence over a formulation patent, analysed as a right to use (conclusion given by the case). The licence period starts on 1 March 20X1, the date from which the manufacturer can exploit the patent. The consideration comprises a fixed amount of …, payable on signature, and a royalty of … of the sales of products manufactured under the licence. The manufacturer's sales reach … in 20X1 and are estimated at … over the following years. Determine the royalty revenue and the total revenue recognised by Solvane in 20X1.CalculationL4Variant
- Ludocraft grants a games studio a licence to exploit its graphics engine, analysed as a right to use (conclusion given by the case); the engine is made available to the studio on 1 July 20X1, the start of the licence period. The studio pays a flat fee of … and … for each copy sold of a game developed with the engine. It sells … copies in the second half of 20X1 and projects … for 20X2. Calculate the royalty portion and Ludocraft's total revenue for 20X1.CalculationL4Variant
- The Aquilon studio grants a toy manufacturer a distinct licence over the characters of its animated series and also provides it with graphic designs for its packaging. The only consideration is a royalty of 6% of toy sales, which pays for both the licence and the designs. Aquilon reasonably expects the manufacturer to ascribe significantly more value to the licence than to the designs (case data). How does Aquilon account for the royalty?Single choiceL4
- Mécanova sells packaging lines to a manufacturer and, as an ancillary item, grants it a licence to use a calibration patent. The consideration is an amount per unit packaged on the lines, which pays for both the machines and the licence. Mécanova reasonably expects the customer to ascribe significantly more value to the machines than to the licence (case data). Which requirements apply to this usage-based consideration?Single choiceL4
- The Pélican studio grants Jouéco, for five years and for France and Belgium only, a distinct licence allowing it to reproduce a cartoon character on plush toys. The contract does not mention Pélican's future activities; however, as for all its characters, Pélican produces new episodes featuring the character every year, publishes its broadcasting schedule and promotes it. The popularity of the plush toys largely depends on these episodes, which transfer no good or service to Jouéco (case data). The consideration is a royalty of 7% of plush toy sales. Write a memo analysing the nature of the licence and the pattern of recognition of the royalty.JudgmentL4
- Optima grants a distributor a three-year licence over data analysis software. The software only works while connected to Optima's hosted platform, which continuously feeds it with data; the customer can therefore only benefit from the licence together with this online access service, which only Optima provides (case data). How does Optima analyse the contract?Single choiceL4
Repurchase, consignment and bill-and-hold arrangements16 questions
- Agrimat sells a combine harvester to a farmer for EUR 300,000 and retains the right to repurchase it in two years for EUR 220,000; the transaction is not part of a sale and leaseback. True or false: Agrimat does not recognise a sale, and the arrangement is accounted for as a lease in accordance with IFRS 16, because the repurchase price is lower than the original selling price.True / falseL3
- Vinéa sells a stock of ageing brandies to a spirits merchant for EUR 1,000,000 and undertakes to repurchase it in two years for EUR 1,100,000. Case data: even after taking into account the time value of money, the repurchase price exceeds the original selling price. True or false: Vinéa recognises revenue of EUR 1,000,000 when the casks are transferred to the merchant.True / falseL3
- The Navalis shipyard sells a workboat to a shipowner for EUR 2,000,000 and holds an option allowing it to repurchase the boat in one year for EUR 2,100,000. Case data: even after taking into account the time value of money, the repurchase price exceeds the original selling price. How does Navalis reflect the transaction at the date of sale?Single choiceL3
- Grues Atlas sells a crane to a civil engineering company for EUR 800,000. The customer can require Atlas to repurchase the crane in three years for EUR 450,000, whereas the expected market value of the crane at that date is EUR 250,000; Atlas concludes (professional judgement) that the customer has a significant economic incentive to exercise its option. The transaction is not part of a sale and leaseback. How does Atlas account for the arrangement?Single choiceL3
- Clinéquip sells 50 medical beds to a clinic for EUR 400,000. The clinic can ask Clinéquip to repurchase the beds in one year for EUR 120,000; the expected market value of the beds at that date is EUR 180,000 and Clinéquip concludes (professional judgement) that the clinic has no significant economic incentive to exercise its option. How is the arrangement accounted for?Single choiceL3
- Cristallerie Morvan delivers tableware sets to home decoration shops. Which of the following clauses are indicators of a consignment arrangement?Multiple choiceL3
- Tôlerie Brivoise invoices a customer for electrical cabinets that it keeps in its warehouses until a later delivery. In addition to the general indicators of transfer of control, which criteria must all be met for the customer to obtain control of the cabinets in this bill-and-hold arrangement?Multiple choiceL4
- Orfèvra sold a collection of silverware to a museum while retaining an option to repurchase it at a price higher than the selling price; the arrangement was accounted for as a financing arrangement, with a financial liability. At maturity, Orfèvra lets its option lapse unexercised. What does it do?Single choiceL3
- Ventoux Cycles delivers 40 electric bikes to an independent retailer. The retailer only pays for a bike after selling it to an end customer; Ventoux can at any time recall unsold bikes to send them to another shop, and the retailer can return unsold bikes after six months. The retailer pays a flat security deposit. How does Ventoux treat the delivery to the retailer?Single choiceL4
- Métallis manufactures ten stainless steel tanks for Hydra. At the request of Hydra, whose construction site is delayed, the completed tanks are kept for six months in Métallis's warehouse, which provides custody. The tanks bear Hydra's name, are stored separately, ready for shipment, and Métallis can neither use them nor deliver them to another customer. The price invoiced covers the tanks and their custody. How does Métallis account for the contract when the tanks are completed?Single choiceL4
- At the request of a hotel chain short of space, Textilia invoices it on 20 December 20X1 for a batch of 5,000 bathrobes, paid immediately, and keeps the batch in its warehouse until March 20X2. The bathrobes remain mixed with Textilia's general inventory, from which it allows itself to draw to fill urgent orders from other customers, replacing them before shipment. Can Textilia recognise the revenue in 20X1?Single choiceL4
- Gastronova, a manufacturer of kitchen robots, delivers 300 robots to a network of dealers at the end of the reporting period. The terms provide that: the dealers pay a 10% deposit on delivery; the balance is only due on resale to the end consumer; Gastronova can transfer unsold robots from one dealer to another; unsold robots can be returned to it at any time, the deposit then being refunded. Management wishes to recognise revenue on delivery, arguing that the robots are physically at the dealers' premises and that the deposit has been collected. Write a judgement memo.JudgmentL4
- Aérolis sells a flight simulator to a flying school for EUR 500,000. The school can require Aérolis to repurchase the simulator after four years for EUR 260,000, an option that can be exercised during one month only. According to the market studies available at contract inception, the expected market value of such a simulator after four years is around EUR 300,000. The transaction is not part of a sale and leaseback. Write a memo analysing the accounting for the arrangement at contract inception.JudgmentL4
- Forges Ardoise sells industrial presses. Which of the following clauses, included in its sales contracts, make the sale a repurchase agreement within the meaning of IFRS 15?Multiple choiceL3
- The shipyard Navires Corail sells a sailing yacht to a rental company for EUR 2,000,000. The contract requires Navires Corail to repurchase the yacht in 2 years for EUR 2,100,000 if the rental company so requests. At contract inception, the expected market value of the yacht at the repurchase date is estimated at EUR 1,500,000 (case data). The transaction is not part of a sale and leaseback. How does Navires Corail account for this arrangement?Single choiceL4
- Grues Atlas sells a mobile crane for EUR 800,000 to a public works company. The contract requires Grues Atlas to repurchase the crane in 3 years for EUR 800,000 if the customer so requests. At contract inception, Grues Atlas estimates (case data) that the market value of the crane at the repurchase date will be EUR 950,000, owing to strong demand and rising prices for new cranes. Write a reasoned memo on the classification of this arrangement and on the resulting accounting treatment at the date of sale, distinguishing what is a rule from what is judgement.JudgmentL4
Customer acceptance4 questions
- Ferronord sells steel beams whose agreed specifications (dimensions and weight) are measured and documented before each shipment. The contract includes a customer acceptance clause. True or false: customer acceptance is here a formality that does not affect the timing of the transfer of control of the beams.True / falseL2
- Médilab delivers three analysers to a laboratory for a 60-day trial. The laboratory only commits to pay at the end of the trial, if it decides to keep the devices. When is control of the analysers transferred to the laboratory?Single choiceL2
- On 10 December 20X1, Robotec delivers a palletising robot designed for a customer. Contractual acceptance depends on reaching a rate of 600 pallets per hour under the actual conditions of the customer's plant, which cannot be replicated at Robotec before delivery. On-site tests are scheduled for January 20X2. When can Robotec conclude that control of the robot has transferred?Single choiceL3
- The accounting department of Optilux, which sells standard light fittings and custom lighting installations, applies the following internal rule. True or false: as soon as a contract contains a customer acceptance clause, revenue can never be recognised before the acceptance certificate is signed.True / falseL3