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TA-34A: REVENUE & CONSTRUCTION CONTRACTS

Sources.. PAS 1 1/PAS l8/Conceptual Framework/Applicab,le AICPA/Various test banks

1- Revenue is recognized in the income statement when:

I) It is probabte tfrat any future economic benefit associated with the revenue will flow to the entity.
II) The amount of revenue can be measured with reliability.
a. I only c. Both I and iI
b. II only d. Neither I nor II
2. Revenue from SALE OF GOODS shall be recognized at a point when
a. The product is available for sale to the ultimate consumer
b. The entire amount of receivable has been collected from the customergoods
c. The seller has transferred the risks and rewards of ownership of the to the buyer
d. The seller retains effective control over the goods sold and continuing managerial
involvement to the degree usually associated with ownership

Which of these conditions does NOT apply to the recognition of revenue for transactions involving
?,3 RENDERING OF SERVICES?
a. It is probable that payment for the services shall be received by the entity
b. The significant risks and rewards of ownership have been transferred to the buyer
c. The stage of completion at the end of the reporting period can be measured reliably
d. The arnount of revenue, costs incurred and costs to complete can be measured reliably

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4. Under PAS 18; .&enue arisinE from RENDERING of SERVICES shall be recognized usinq
a- Cost-recovery- approach
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only
b Percentage-of-completion method only
c. Percentage-of-completion method, if cost-recovery approach iS not possible
d. Cost-recovery approach, if percentage-of-completion method is not possible

5. So long as it is probable that the economic benefits will flow to the enterprise and the amount of
revenue can be measured reliably, revenue from ROYALTIES should be recognized on what basis?
a. Cash basis
. b- Accrual basis
c. Percentage-of-completion basis
d. Net present value of cash flows method

6. Revenue from INTERESTS should be recognized using which measurement basis?

\/ a. The cash basis
b. The accrual basis
c. The historical cost basis
d. The effective interest method as set out in PAS 39
ii 7. PAS 18 allows the recognition of DIVIDEND as revenue only when
a. The cash is received
b. The revenue has been realized
c. When the right to receive payment is established
d. The dividend amount is determined even if the dividend has not been declared

8. Under PAS 18, revenue is measured based on

F a. Fair value of the consideration received or receivable
b. Fair value of the consideration transferred or payable r

c. Carrying value of the consideration received or receivable

d. Carrying value of the consideration transferred or payable
9. Under PAS 11, it is a contract specifically negotiated for the construction of an asset or combination of
assets that are closely interrelated in terms of their design, technology, function, or ultimate use.
a. Construction contract c, Future contract
b. Marriage contract d. Forward contract

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1O. A construction contract in which the contractor is reimbursed for a certain an'lount of defined costs plus
h a fixed fee or
a.
percentage of the defined costs.
. Cost-plus contract
b. Fixed price contract
c. Market Price contract
d. Variable price contract

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