Confidence Co entered into a contract on 1 January 20X5 to build a factory. The total contract revenue was $2.8 million. At 31 December 20X5 the contract was certified as 35% complete. Costs incurred during the year were $740,000 and costs to complete are estimated at $1.4 million. $700,000 has been billed to the customer but not yet paid.

Identify whether the contract will be recognised as a contract asset or liability and what the carrying amount will be in the statement of financial position of Confidence Co as at 31 December 20X5?

Consignment inventory is an arrangement whereby inventory is held by one party but owned by another party. It is common in the motor trade.

Which TWO of the following indicate that the inventory in question is consignment inventory?

On 25 June 20X9 Cambridge Co received an order from a new customer, Circus Co, for products with a sales value of $900,000. Circus Co enclosed a deposit with the order of $90,000.
On 30 June Cambridge Co had not completed credit checks on Circus Co and had not despatched any goods.

According to IFRS 15 Revenue from Contracts with Customers, how should Cambridge Co record this transaction in its financial statements for the year ended 30 June 20X9?

You are required to calculate (i) Revenue, (ii) Current liability, (iii) Trade receivables

Following are the options:

Newmarket Co's revenue as shown in its draft statement of profit or loss for the year ended 31 December 20X9 is $27 million. This includes $8 million for a consignment of goods sold on 31 December 20X9 on which Newmarket Co will incur ongoing service and support costs for two years after the sale.

The supply of the goods and the provision of service and support are separate performance obligations under the terms of IFRS 15 Revenue from Contracts with Customers.

The cost of providing service and support is estimated at $800,000 per annum. Newmarket Co applies a 30% mark-up to all service costs.

At what amount should revenue be recognised in the statement of profit or loss of Newmarket Co for the year ended 31 December 20X9? (Ignore the time value of money.)

Broom Co successfully receives a government grant of $1,500,000 on 1 January 20X5 allowing it to purchase an asset which costs $500,000, also on 1 January 20X5. The asset has a ten-year useful life and is depreciated on a 20% reducing balance basis. Company policy is to account for all grants received as deferred income.

What amount of income will be recognised in respect of the grant in the year to 31 December 20X5?

Yling Co entered into a contract in respect of which performance obligations are satisfied over time on 1 January 20X4. The contract is expected to last 24 months. The price which has been agreed for the contract is $5 million. At 30 September 20X4 the costs incurred on the contract were $1.6 million and the estimated remaining costs to complete were $2.4 million. On 20 September 20X4 Yling Co received a payment from the customer of $1.8 million which was equal to the total of the amounts invoiced. Yling Co calculates the stage of completion of its performance obligations on contracts on the basis of amounts invoiced to the contract price.

What amount would be reported in Yling Co's statement of financial position as at 30 September 20X4 as the contract asset arising from the above contract?

Which TWO of the following are acceptable methods of accounting for a government grant relating to an asset in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance?

Intellect Intelligence Co receives a government grant of $400,000 on 1 April 20X6 to facilitate purchase on the same day of an asset which costs $600,000. The asset has a five-year useful life and is depreciated on a 25% reducing balance basis. Company policy is to account for all grants received as deferred income.

What amount of income will be recognised in respect of the grant in the year to 31 March 20X8? $_______

Note. You are not required to put $ sign nor any coma. (e.g. 1000)

The following details apply to a contract where performance obligations are satisfied over time at 31 December 20X5.

The contract is agreed to be 45% complete at 31 December 20X5.

What amount should be recognised in the statement of financial position as at 31 December 20X5 as a contract asset?

On 1 October 20X2 Pricewell Co entered into a contract to construct a bridge over a The total contract revenue was $50 million and construction is expected to be completed on 30 September 20X4. Costs to date are:

The sales value of the work done at 31 March 20X3 has been agreed at $22 million and the estimated cost to complete (excluding plant depreciation) is $10 million. The specialist plant will have no residual value at the end of the contract and should be depreciated on a monthly basis. Pricewell Co recognises satisfaction of performance obligations on the percentage of completion basis as determined by the agreed work to date compared to the total contract price.

What is the profit to date on the contract at 31 March 20X3?

Repro Co, a company which sells photocopying equipment, has prepared its draft financial statements for the year ended 30 September 20X4. It has included the following transactions in revenue at the stated amounts below.

Which of these has been correctly included in revenue according to IFRS 15 Revenue from Contracts with Customers?

Springthorpe Co entered into a three-year contract on 1 January 20X2 to build a factory. This is a contract where performance obligations are satisfied over time. The percentage of performance obligations satisfied is measured according to certificates issued by a surveyor. The contract price was $12 million. At82 Springthorpe Co entered into a three-year contract on 1 January 20X2 to build a factory. This is a contract where performance obligations are satisfied over time. The percentage of performance obligations satisfied is measured according to certificates issued by a surveyor. The contract price was $12 million. At31 December 20X2 details of the contract were as follows.

Identify whether a contract asset or contract liability should be recognised and at what carrying amount in the statement of financial position of Springthorpe Co as at 31 December 20X2?