Question 1

Little Corp. (Little) provided research services to a customer in May 2020. The estimated costs of performing the research was $1,000, and Little charged the customer $1,500, which was paid immediately. Little reports under IFRS. Which of the following are part of the journal entry to record this transaction from Littles perspective?

Question 1 options:

A	DR Cost of goods sold $1,000
B	CR Deferred revenue $1,500
C	DR Revenue $1,500
D	CR Revenue $1,500

Question 2

IFRS follows a five-step process for the recognition of revenue. Each step must be analyzed in order to determine when revenue should be recognized, and at what amount. Which of the following is step 3 in the five-step process?

Question 2 options:

A	The contract terms have been approved by at least one of the parties.
B	Determine the transaction price.
C	Allocate the transaction price to each performance obligation.
D	Identify the performance obligation(s).

Question 3

Which of the following statements describes commercial substance under IFRS?

Question 3 options:

A	When the risk, timing, or amount of the entitys future cash flows is expected to change as a result of the contract
B	When the risk, timing, or amount of the entitys current cash flows is expected to change as a result of the contract
C	When the amount of consideration can be measured and the payment terms are determined
D	When it is probable that the customer will pay the entity

Question 4

On February 18, 2020, Pattys Potato Co. (PPC) enters into a contract with a customer to supply 50,000 pounds of potatoes over a one-year period. On March 30, 2020, the customer requests that PPC provide an additional 30,000 pounds of potatoes over the term of the original contract for the same price per pound. At that time, PPC had delivered 5,000 pounds of potatoes from the original contract. PPC prepares its financial statements in accordance with IFRS. How should PPC account for this additional request by the customer?

Question 4 options

A	As a new contract for the additional 30,000 pounds of potatoes
B	As a new contract for the potatoes still to be supplied, which is 75,000 pounds
C	Adjust the original contract to increase the total pounds of potatoes supplied to the customer by 30,000 pounds
D	As a new contract for the total amount requested by the customer, which is 80,000 pounds

Question 5

On July 1, 2020, Construct Inc. (CI) signed a contract for $8 million to build an apartment building in Sicamous, B.C. The contract included a clause that provided for an early-completion bonus if CI finishes the project at least one month before the scheduled completion date of October 31, 2021. The bonus completion schedule follows, along with senior managements estimates of the probability of finishing by the specified dates:

Project completion date	Bonus payment	Estimated probability
Prior to July 31, 2021	$200,000	10%
Between August 1 and 31, 2021	$150,000	20%
Between September 1 and 30, 2021	$100,000	40%
October 1, 2021, or later	$0	30%

CIs year end is December 31. It reports its financial results in accordance with IFRS and uses the most likely amount to estimate variable consideration. What transaction price should be used to recognize revenue for this contract?

Question 5 options:

A	$8,000,000
B	$8,090,000
C	$8,100,000
D	$8,112,500