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IF1 Exam questions with complete solutions graded A+
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IF1 Exam questions with complete solutions graded A+
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IF1 Exam questions with completesolutions graded A+
When accounting for long-term construction contracts under IFRS, which of the following statements is
true?
Question 1 options:
Before completion of the project, the net balance of the contract assets and progress billings accounts is
reported on the statement of financial position as a current asset or liability.
All eligible construction-related costs are credited to the contract assets account.
Earned profit is credited to the construction-in-progress revenue account.
Interim billings on t - correct answer ✔✔Answer A) is correct. If the contract asset (that is, costs incurred
and earned profit) isgreater than the progress billings, the account will have a net debit balance and
bepresented as an asset. If the billings are greater than the contract asset, the account willhave a credit
balance and be presented as a liability.
Which of the following statements regarding revenue recognition for an entity that reports using IFRS is
true?
Question 7 options:
Royalties are recognized in revenue in the same period that the sales or usage occurred that generated
the royalty.
Non-refundable fees should be recognized as revenue when received by the entity.
Own-party and third-party customer rewards are accounted for in a similar manner.
A warranty that can be purchased separately is accounted for under IAS 37 Provisions, C - correct answer
✔✔Answer A) is correct. Royalties can be based on either sales or usage, depending onthe type of asset
or intellectual property. As with all revenue, royalty revenue is onlyrecognized when the amount can be
measured reliably.
,When accounting for a sales rebate under IFRS, an entity can measure the expected rebates claimed by
using the expected value or the most likely amount.
Which of the following statements regarding accounting for rebates is true?
Question 12 options:
Rebates are considered to be a form of fixed consideration.
The most likely amount method takes the range of possible outcomes and considers the probability of
each.
The most likely amount method is most appropriate when the likely outcome is one o - correct answer
✔✔The most likely amount method is most appropriate when the likely outcome is one of just a few
choices.
Polar Express Inc. had a fire in its Churchill warehouse and must estimate its finished goods inventory for
insurance purposes. Which of the following details must be available from the Polar Express's records in
order to apply the retail method of estimating inventory?
Question 13 options:
Historical gross profit percentage
Sales tax rate
Days sales in inventory
Markups - correct answer ✔✔Answer D) is correct. Any adjustments to the standard retail price are
needed toperform the retail method. Markups are an increase in the standard retail pricemade by the
retailer.
Which of the following is a disadvantage of the retail method of estimating the ending balance of
inventory?
, Question 14 options:
Additional information outside of the regular accounting system must be tracked.
The retail method is expensive as it requires regular physical inventory counts.
Locations must shut down to perform an inventory count to determine ending inventory.
A constant gross profit percentage must be maintained over the short term. - correct answer ✔✔Answer
A) is correct. Items reported only on a retail basis include markups, markupcancellations, markdowns,
markdown cancellations, and employee discounts. Thesetypically are not part of the regular accounting
system and therefore must be maintainedin a separate system
Which of the following statements correctly describes the subsequent measurement of intangible assets
under IFRS?
Question 17 options:
All intangible assets must be subsequently measured using the cost model.
The recorded value of intangible assets with an infinite life does not change until the asset is sold.
Intangible assets are expensed in the year following their acquisition.
Intangible assets with a finite life are amortized over their useful life. - correct answer ✔✔Answer D) is
correct. An intangible asset with a finite life is amortized over its usefullife, while an indefinite-life
intangible asset is not amortized.
Which of the following statements correctly describes the derecognition of intangible assets under IFRS?
Question 18 options:
Any gain or loss on derecognition is recorded as part of other comprehensive income.
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