Task 1
In a number of the signed agreements (Appendix I), Jason is questioning whether a contract exists as required in IFRS 15. For each agreement, Betty has been asked to consider if a contract exists and if not, which criterion required by IFRS 15 is missing.
Instructions:
· In Column B, select the most relevant criterion from the drop-down list that is missing for each customer arrangement listed in Column A to assess whether a contract exists under IFRS. Each criterion may be used more than once or not at all.
A B
1 Customer Missing criterion
2 Electronic Distributors Inc.
3 Nordic Explorations Inc.
4 Environmental Stewards Inc.
5 Safe Waters Inc.
6 Carleton Marina
Column B drop-down options
All criteria of the contract are met.
The parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations.
The contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change).
Each party’s rights regarding the goods or services to be transferred are identified.
The goods and services to be transferred are distinct and can be reliably measured.
The payment terms for the goods or services to be transferred are identified.
Any variable consideration that is part of the payment terms can be measured reliably.
It is probable that OI will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.