When a contract includes an option to buy additional goods or services, when does that option give rise to a performance obligation?

Q: If a contract modification adds distinct goods or services and the contract price increases by an…

A: Any modification in the price or scope or both with regard to a contract by the parties to the…

Q: The contract rate is above the market rate. The contract rate is equal to the market rate.

A: The correct answer is option (a) The contract rate is above the market rate.

Q: What is the difference in Forward Contracts and Future Contracts

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Q: Explain how purchase commitments are recorded for the lower of contract price or market price.

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Q: (Based on Appendix 9) Explain how purchase commitments are recorded for the lower of contract price…

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Q: consignor satisfies its performance obligation under consignment contract?

A: Consignment sales are sales made by the one person (consignee) on behalf of the other person…

Q: A. It is probable that an outflow of economic benefits will be required to settle an obligation B.…

A: Option D

Q: Explain the accounting for contract modifications.

A: Contract modification may occur when any addition, change or cancellation of specific terms and…

Q: If the outcome of a long-term contract can be measured reliably, the preferred accounting method…

A: The percentage of completion method is an accounting technique in which long-term deed income and…

Q: What type of contract has been formed in this case?

A: Contracts are the agreements between two parties. It gives the  option to buy,sell, lend etc. It…

Q: what is fixed-price contract, and what are the benfit of chosing it

A: A contract where the price is fixed as negotiated by the parties is known as a Fixed Price Contract.…

Q: I. PFRS 15 provides that where a contract with a customer has multiple performance obligations, an…

A: As per PFRS 15 revenue from contract with customers, it is based on 5 step  model. Identify the…

Q: Briefly explain the conditions when a contract modification shall be accounted for as a separate…

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Q: Understand how variable consideration and other aspects of contracts affect the calculation and…

A: Variable consideration:  It refers to the amount of revenue that is to be recognized as per the…

Q: How to Allocate the Transaction Price to Each Performance Obligation?

A: In revenue recognition , following steps are done- first of all we determine whether there is a…

Q: What are the types of agreement related to sale-leaseback agreement?

A: Sale and Leaseback Agreement is a kind of financial transaction. This is a situation that arises…

Q: Under PFRS 15, when shall a consignor recognize revenue from its consignment sales?   When it is…

A: Performance obligation is satisfied when control is transferred Revenue shall be recognized with the…

Q: When a contract contains more than one performance obligation, the seller allocates the transaction…

A: Contract: A contract is a legal agreement among two or several parties to perform some task and…

Q: how payment or performance extinguishes an obligation.

A: An obligation arises when an agreement made between parties satisfies all the necesaary conditions…

Q: Define contract laibilities.

A: Liabilities: The claims creditors have over assets or resources of a company are referred to as…

Q: Is variable consideration included in the calculation of a contract’s transaction price? If so, how…

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Q: What is a forward contract?

A: Introduction: This question is related to the concept of financial derivatives. Derivative…

Q: what is the specific point in time when the consignor satisfies is performance obligation under…

A: Consignment represents the arrangement where the goods are sold to the buyer by a third party.

Q: Determine whether a contract exists, and whether some frequently encounteredfeatures of contracts…

A: A contract exists when it has commercial substance and all parties to the contract are committed to…

Q: Is the “forward price” the same thing as the “value of the forward contract” Explain.

A: Derivative is defined as the contract, which are between the two or more parties, who has the value…

Q: How does a seller allocate a transaction price to a contract’s performance obligations?

A: Transaction price: Transaction price is the amount of consideration that is estimated by the company…

Q: What is an option? How does an Option differ from a forward or future contract?

A: Derivative Security: A derivative is financial security whose price and value are determined based…

Q: Unconditional rights to receive consideration because a performance obligation has been satisfied…

A: Lets understand the meaning of term given. As per IFRS 15" Revenue from the contract with the…

Q: Does contract modification always result in a new contract if the modification adds distinct goods…

A: The given situation can be linked with International Financial Reporting Standards (IFRS) 15 which…

Q: Discuss the factors that impact on whether an agreement with a supplier is considered to be a…

A: An agreement with supplier : An agreement with the supplier is a agreement between the two persons,…

Q: Explain how to account for revenue on a long-term contract over time as opposed to at a point in…

A: The revenue recognition principle: The revenue recognition principle refers to the revenue that…

Q: What is a repurchase agreement (product financing)arrangement? How should a product repurchase…

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Q: A contract to sell is the same as a conditional contract of sale. Do you agree? Explain your answer.

A: A contract to sell is a contract that is legally binding and involves the purchase of products or…

Q: What is a performance obligation? Under what conditionsdoes a performance obligation exist?

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Q: The contract in which the buyer has the right but not an obligation to buy or sell and underlying…

A: Option contract refers to the contract in which buyer or seller is having right but not an…

Q: Why does “Identify the performance obligation(s) in the contract,” is important? Explain with…

A: Definition: Performance obligation: A performance obligation is a promise to transfer to the…

Q: Explain the reporting for (a) costs to fulfill a contract and (b) collectibility.

A: Fulfillment costs are divided into two categories: (1) Those that arise from assets; (2) Those that…

Q: . Which of the following may not be equal to the contract rate of interest? a. stated rate b.…

A: Contract rate of interest is the defined rate of interest on bonds, notes or loan.

Q: If the outcome of a long-term contract can be measured reliably, the preferred accounting method…

A: The percentage of completion method is an accounting technique in which long-term deed income and…

Q: What Is Benefits of Long-Term Contracts?

A: Long-term contracts are the contracts which runs over number of years. Long-term contracts are also…

Q: Which of the following scenarios regarding a sale and leaseback transaction would result to a loss…

A: If fair value is less than the carrying amount of the asset then the loss on sale back should be…

Q: Explain how to allocate the transaction price to each performance obligation.

A: If a customer receives a discount for acquiring a bundle of goods or services, the entity should…