Question

1.Consistent with ASC topic 326, expected credit losses are recognized as

Multiple Choice

• a reduction of the related revenue.

• an addition to cost of goods sold.

• an aggregated expense.

• a separately reported loss.

2. Donau Inc. performs services with a normal contract price of $265,000 for a new customer. The customer signs a non-interest bearing note of $300,000. The differences between the normal contract price and the face amount of the note is considered

Multiple Choice

• a sales discount.

• a credit allowance.

• imputed interest.

• additional service revenue.

3. Which of the following must be disclosed for all categories of receivables?

Multiple Choice

• Future expected receivables

• Financing options available for major customers

• Use of notes receivables to attract new clients

• Changes in risk factors, policies, or methodologies

4. Consistent with IFRS No. 7, the fair value must be disclosed for receivables and loans with the following characteristics:

Multiple Choice

• short-term maturity

• long-term maturity

• recognized at amortized cost

• All of these choices are correct

Answer 1

Question 1:

Option D. A Seperately reported loss

Expected Credit losses are nothing but the differences between the contractual cash flow due to the entity and cash flow that entity actually expects to receive.

Question 2:

Option C. Imputed Interest

As the Customer made the company to wait for getting their revenue in their hands.

So, the reward for wait is the imputed Interest & to be recognised as revenue

Question 3:

Option D. Changes in risk factors, policies, or methodologies

The receivables has to be classified & presented as per risk based, policy based on the face of balance sheet.

Question 4:

Option C. Recognised at Amortised Cost

The Receivables & Loans are to recognised at fair value when using amortised cost method, FVTOCI & FVTPL.