Deck 3: Key Differences Between IFRS and US-Part 1

Question 1

What is the correct order of steps in applying the revenue recognition model?
1)Identify the separate performance obligations in the contract
2)Identify the contract with the customer
3)Determine the transaction price for the entire contract
4)Recognize revenue when each separate performance obligation is satisfied
5)Allocate the transaction price to separate performance obligation

A)2)1)3)5)4)
B)1)2)3)4)5)
C)1)2)3)5)4)
D)2)1)3)4)5)

Answer 1

A

Question 2

Which of the following statements is true regarding revenue recognition?

A)A major goal of the IASB/FASB Convergence Project is agreement on a single definition of revenue recognition
B)The agreement would eliminate the complex differences in revenue recognition that currently exist between U.S.GAAP and IFRS
C)All of the above
D)None of the above

Answer 2

C

Question 3

Which following factors are taken into consideration when determining whether a performance obligation has been satisfied?

A)The entity has right to payment
B)The customer has legal title or a service has been performed
C)The customer has physical possession
D)The risks and rewards of ownership have been transferred to the customer
E)All of the above

Answer 3

E

Question 4

Which of the following is not true regarding performance obligation?

A)The amount of revenue recognized would be the amount of consideration promised by the customer in exchange for the performance obligation
B)Most sales and service contracts consists of a single performance obligation.
C)A contract may consist of several performance obligations.
D)The entity has right to payment determines a performance obligation has been satisfied.

Question 5

Which of the following arguments regarding principle-based standards is correct?

A)Contain bright-line tests
B)Have many exceptions
C)Are inconsistent with and derived from a conceptual framework
D)Present a concise explanation of the accounting objective and the integration of the objective into the standard

Question 6

Which methods do IFRS and U.S.GAAP typically record service revenue,respectively?

A)Percentage-of-completion method,completed-contract method
B)Relying on specific industry guidance,completed-contract method
C)Percentage-of-completion method,relying on specific industry guidance
D)Completed-contract method,percentage-of-completion method

Question 7

Which one is not a characteristic of rules-based standards?

A)More reliance on conceptual framework
B)Less reliance on professional judgment
C)More level of detailed guidance
D)Extensive amount of industry specific guidance

Question 8

Which of the following statements is true regarding the differences between how recycling occurs in U.S.GAAP and IFRS?

A)Actuarial gains and losses are recycled under IFRS
B)IFRS recognize the OCI amount immediately in retained earnings.
C)U.S.GAAP forbid recycling of revaluation surplus associated with long-lived assets.
D)IFRS forbid recycling of revaluation surplus associated with short-term assets.

Question 9

Which of the following is critical to principles-based standards?

A)May lose comparability because of management and auditor discretion in the application of the principles
B)Provide greater difficulty in seeking remedies against "bad actors" through either enforcement or litigation
C)Cause concerns to preparers and auditors that regulatory agencies might not accept good faith judgments
D)All of the above

Question 10

Which of the following arguments regarding pure rules-based standards is not correct?

A)May not relate to the conceptual framework,but to more specific,prescriptive rules
B)Provide detailed,interpretive guidance to address the application for every possible transaction
C)Place much reliance on the professional judgment of the preparer
D)Result in acts of compliance as opposed to means of communicating information

Question 11

Which of the following statements regarding the difference between U.S.GAAP and IFRS is correct?

A)IFRS has significant guidance for transactions,industries,exceptions,and specific recognition and measurement guidance.
B)U.S.GAAP contains broad principles to account for transactions across industries,with limited specific guidance and stated exceptions to the general guidance.
C)In application,U.S.GAAP may be more aligned with IFRS than what might be apparent from the standards themselves.
D)U.S.GAAP has requirements that are specific to the U.S legal and regulatory environment while IFRS were not developed for any particular jurisdiction.

Question 12

Which of the following is correct regarding the guidance provided by IFRS and U.S.GAAP?

A)In the construction industry,IFRS provides specific guidance for revenue recognition on contracts.
B)In the software industry,IFRS provides specific guidance for typical software arrangements,upfront fees,and multiple deliverable arrangements.
C)In the software industry,U.S.GAAP only provides general guidance.
D)None of the above.

Question 13

Which are two conditions that must be met before revenue is to be recognized under IFRS?

A)Persuasive evidence of an arrangement exists and product or service can be delivered
B)Product or service can delivered and collectability is reasonably assured
C)Persuasive evidence of an arrangement exists and the market of the products or services are well regulated
D)Seller's price to the buyer is fixed or determinable and collectability is reasonably assured

Question 14

Under IFRS and U.S.GAAP,which one is not included when recycling occurs?

A)Unrealized gains and losses on available-for-sale securities
B)Unrealized gains and losses on effective cash flow hedges
C)Unrealized gains and losses on goodwill
D)Cumulative foreign currency translation adjustments

Question 15

Assume that Yosuke wants to rent a room at a Lakeview apartment,the landlord requires a one-time,non-refundable $50 application fee and a contract cancelable with 5 days notice,charges $500 per month to rent the apartment for the next 12 months.How are the $50 application fee and the $500 monthly rental accounted for under U.S.GAAP or under IFRS?

A)Under U.S.GAAP,the $50 payment is recognized as revenue immediately,while the $500 payment is recorded as revenue each month.
B)Under U.S.GAAP,the $50 payment is recorded as unearned revenue and allocated over a reasonable future period.The $500 payment is recorded as revenue each month.
C)Under IFRS,the $50 payment is recorded as unearned revenue and allocated over a reasonable future period.The $500 payment is recorded as revenue each month.
D)None of the above.