Question
Required information [The following information applies to the questions displayed below.] IFRS interprets the word probable as indicating a lower probability threshold than does U.S.
Required information
[The following information applies to the questions displayed below.] IFRS interprets the word probable as indicating a lower probability threshold than does U.S. GAAP. As a consequence, a seller could conclude a contract meets the probable that it will collect the amounts its entitled to receive threshold and recognize revenue under IFRS but not under U.S. GAAP. Also, IFRS doesnt tie the timing of revenue recognition for licenses to whether a license involves functional versus symbolic intellectual property, so IFRS might allow revenue recognition at a point in time for symbolic IP licenses that would require revenue recognition over time under U.S. GAAP.
1. Knowledge Check 01 Which of the following statements about the guarding against overestimating variable consideration under U.S. GAAP and IFRS is true?
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Under IFRS, sellers only include an estimate of variable consideration to extent it is probable that a significant reversal of revenue recognized to date will not occur.
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Under U.S. GAAP, sellers only include an estimate of variable consideration to extent it is probable that a significant reversal of revenue recognized to date will not occur.
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U.S. GAAP and IFRS convey the same likelihood with regards to the uncertainty associated with the variable consideration.
2. Knowledge Check 01 Which of the following statements about licensing guidance is true?
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Both IFRS and U.S. GAAP rely on functional/symbolic classifications.
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Under IFRS, sellers of licenses of symbolic intellectual property are not required to recognize revenue over time.
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Under U.S. GAAP, sellers of licenses of functional intellectual property typically recognize revenue over time.
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Under U.S. GAAP, sellers of licenses of symbolic intellectual property typically recognize revenue at a point in time.
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