50 IFRS 15 Practice Questions with Answers

🎯 Master IFRS 15: 50 Practice Questions Every Student Should Know

50 IFRS 15 Practice Questions with Answers: Whether you're preparing for exams, job interviews, or just want to solidify your understanding of IFRS 15, practice makes perfect! These 50 carefully crafted questions cover everything from the 5-step model to complex contract modifications.

💡 How to Use This Guide:

• ✅ Try answering each question first
• ✅ Then check the solution and explanation
• ✅ Focus extra time on areas where you struggled
• ✅ Use these as flashcards for quick review

Master IFRS 16: 50 Practice Questions on Lease Accounting & ROU Assets

📚 BASIC CONCEPTS (Questions 1-15)

Question 1 📊

What is the core principle of IFRS 15?

A) Recognize revenue when cash is received

B) Recognize revenue to depict transfer of promised goods/services at amount reflecting expected consideration

C) Recognize revenue when contract is signed

D) Recognize revenue when production is complete

✅ Answer: B

Explanation: IFRS 15's core principle is to recognize revenue when (or as) control of goods/services transfers to customers, at the amount the entity expects to be entitled to receive.

Master IAS 16: 50 Practice Questions on PPE, Depreciation & Revaluation

Question 2 🎯

How many steps are in the IFRS 15 revenue recognition model?

A) 3 steps

B) 4 steps

C) 5 steps

D) 6 steps

✅ Answer: C

Explanation: The 5-step model: (1) Identify contract, (2) Identify performance obligations, (3) Determine transaction price, (4) Allocate transaction price, (5) Recognize revenue.

Master IFRS 17: 50 Practice Questions on Insurance Contracts & CSM

Question 3 🏪

A contract must be in writing to fall under IFRS 15:

A) True - all contracts must be written

B) False - contracts can be written, oral, or implied

C) True - except for contracts under 12 months

D) Only for contracts over $10,000

✅ Answer: B

Explanation: Contracts can be written, oral, or implied by customary business practices, as long as they meet the contract criteria.

Make IFRS fun and unforgettable! Learn every standard through music—perfect for students and pros alike.

Question 4 ⚖️

Which is NOT a contract criteria under IFRS 15?

A) Parties have approved the contract

B) Payment terms are identified

C) Contract must be profitable

D) Contract has commercial substance

✅ Answer: C

Explanation: Profitability is not a contract criterion. The five criteria focus on approval, rights, payment terms, commercial substance, and collectibility.

Master IFRS 18: 50 Practice Questions on MPMs, Disclosures & Statement Format

Question 5 🏢

A performance obligation is:

A) Any promise in a contract

B) A promise to transfer distinct goods/services (or series)

C) The entire contract

D) Only tangible goods

✅ Answer: B

Explanation: Performance obligations are promises to transfer distinct goods/services (or a series of distinct goods/services that are substantially the same).

Further your learning with IFRS Full Form and Definitions to understand core financial terminology.

Question 6 🏦

For a good/service to be "distinct," it must be:

A) Separately identifiable only

B) Capable of being distinct only

C) Both capable of being distinct AND separately identifiable

D) Profitable for the entity

✅ Answer: C

Explanation: Distinct requires both: (1) customer can benefit from it on its own or with other resources, AND (2) it'sseparately identifiable from other contract promises.

Master IFRS 9: 50 Practice Questions on ECL, Classification & Hedging

Question 7 🏗️

Variable consideration includes:

A) Fixed prices only

B) Discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties

C) Only performance bonuses

D) Only penalties

✅ Answer: B

Explanation: Variable consideration encompasses all forms of variable amounts including discounts, rebates, refunds, credits, price concessions, incentives, bonuses, and penalties.

Question 8 💰

The constraint on variable consideration requires:

A) Including all possible variable amounts

B) Including only the most likely amount

C) Including only amounts for which it's highly probable that reversal won't occur

D) Excluding all variable consideration

✅ Answer: C

Explanation: Include variable consideration only to the extent it's highly probable that a significant reversal won'toccur when uncertainty resolves.

Question 9 🔄

Control transfers when the customer:

A) Signs the contract

B) Has ability to direct use and obtain substantially all benefits

C) Pays for the goods

D) Takes physical possession

✅ Answer: B

Explanation: Control transfers when customer has ability to direct the use of and obtain substantially all remaining benefits from the asset.

Question 10 📈

Revenue is recognized:

A) Always at a point in time

B) Always over time

C) Either at a point in time OR over time

D) When cash is received

✅ Answer: C

Explanation: Revenue is recognized when (or as) performance obligations are satisfied - either over time (if criteria met) or at a point in time.

Question 11 🎨

Revenue is recognized over time when:

A) The contract is longer than one year

B) Customer receives and consumes benefits, asset has no alternative use, or entity has right to payment

C) Payment is received monthly

D) The customer requests it

✅ Answer: B

Explanation: Three criteria for over time: (1) customer receives and consumes benefits, (2) customer controls asset as created, or (3) no alternative use + enforceable right to payment.

Question 12 ⚠️

Contract assets arise when:

A) Cash is received before performance

B) Performance occurs before payment is due

C) The contract is signed

D) The contract is completed

✅ Answer: B

Explanation: Contract assets arise when an entity performs (transfers goods/services) before receiving consideration or before payment is unconditionally due.

Question 13 🏪

Contract liabilities (deferred revenue) arise when:

A) Performance occurs before payment

B) Payment is received before performance

C) The contract is unprofitable

D) Variable consideration exists

✅ Answer: B

Explanation: Contract liabilities arise when customer pays consideration before the entity transfers goods/services to the customer.

Question 14 📊

Significant financing components:

A) Must always be separated

B) Are ignored if payment is within one year of performance

C) Only apply to contracts over $100,000

D) Are always immaterial

✅ Answer: B

Explanation: Entities need not adjust for financing effects if payment is expected within one year of when goods/services are transferred.

Question 15 🔍

IFRS 15 applies to:

A) All revenue contracts

B) Contracts with customers only

C) Sale of goods only

D) Service contracts only

✅ Answer: B

Explanation: IFRS 15 applies to contracts with customers, but excludes leases (IFRS 16), insurance (IFRS 17), financial instruments (IFRS 9), and certain other transactions.

25th anniversary wishes for parents with 150+ heartfelt messages & gift ideas to celebrate love.

🏭 PRACTICAL APPLICATIONS (Questions 16-35)

Question 16 📱

A software company sells licenses with 2 years of support. This represents:

A) One performance obligation

B) Two performance obligations

C) Three performance obligations

D) No performance obligations until support is provided

✅ Answer: B

Explanation: Software license and support services are typically distinct - customer can benefit from license alone, and it's separately identifiable from support.

Question 17 🏠

A construction company builds custom homes (no alternative use) and has enforceable right to payment. Revenue should be recognized:

A) When construction begins

B) Over time using progress measurement

C) At completion

D) When cash is collected

✅ Answer: B

Explanation: Meets over-time criteria: no alternative use + enforceable right to payment for performance completed to date.

Question 18 💳

A retailer sells a product for $100 with a $20 manufacturer rebate. Transaction price is:

A) $100

B) $80

C) $120

D) Cannot determine

✅ Answer: A

Explanation: Retailer's transaction price is $100 - the manufacturer rebate is between manufacturer and customer, not affecting retailer's consideration.

Question 19 🏢

A contract has $100,000 fixed fee plus potential $50,000 bonus (60% probability). Using expected value method, transaction price is:

A) $100,000

B) $130,000

C) $150,000

D) $125,000

✅ Answer: B

Explanation: $100,000 + ($50,000 × 60%) = $130,000. Then apply constraint - if highly probable no significant reversal will occur.

Question 20 💼

A company provides equipment ($40,000 standalone price) and installation ($10,000 standalone price) for $45,000. Equipment gets:

A) $40,000

B) $36,000

C) $45,000

D) $25,000

✅ Answer: B

Explanation: Allocate based on relative standalone prices: $40,000 ÷ $50,000 = 80% × $45,000 = $36,000.

Question 21 🌾

An agricultural supplier offers early payment discount of 2% if paid within 10 days. This represents:

A) A separate performance obligation

B) A financing component

C) Variable consideration

D) Contract modification

✅ Answer: C

Explanation: Early payment discounts represent variable consideration - the transaction price varies based on customer payment timing.

Question 22 🏗️

A contractor builds a road (customer controls as constructed). Progress is measured by:

A) Costs incurred

B) Time elapsed

C) Output methods (surveys of progress)

D) Any reasonable method

✅ Answer: D

Explanation: Use input methods (costs, time) or output methods (surveys, milestones) that best depict performance -whichever faithfully represents progress.

Question 23 💰

A fitness center receives $1,200 for annual membership on January 1. Monthly revenue recognition is:

A) $1,200 in January

B) $100 per month

C) $600 in each half year

D) $1,200 in December

✅ Answer: B

Explanation: Performance obligation satisfied over time as customer receives and consumes benefits: $1,200 ÷ 12 months = $100/month.

Question 24 🔄

Bill-and-hold arrangements can recognize revenue when:

A) Goods are manufactured

B) Goods are ready and customer requested bill-and-hold arrangement

C) Invoice is sent

D) Customer takes possession

✅ Answer: B

Explanation: Revenue can be recognized in bill-and-hold when control transfers - requires customer request, goods identified separately, ready for transfer, and entity can't redirect.

Question 25 🏦

A bank charges loan origination fees of $1,000. Under IFRS 15, this:

A) Is recognized immediately

B) Is not covered by IFRS 15

C) Is deferred and amortized

D) Is variable consideration

✅ Answer: B

Explanation: Loan origination falls under IFRS 9 (financial instruments), not IFRS 15. IFRS 15 excludes financial instruments.

Question 26 📊

Product warranties that provide service beyond assuring compliance represent:

A) Assurance-type warranty

B) Service-type warranty (separate performance obligation)

C) Variable consideration

D) Contract modification

✅ Answer: B

Explanation: Service-type warranties provide additional service beyond assuring product meets specifications - they'reseparate performance obligations.

Question 27 🎯

A mobile provider sells phone ($600) with 2-year service plan ($1,200) for $1,500 total. Phone allocation:

A) $600

B) $500

C) $750

D) $300

✅ Answer: B

Explanation: Total standalone: $1,800. Phone gets: $600 ÷ $1,800 × $1,500 = $500.

Question 28 🏪

Gift cards with remote likelihood of redemption (breakage):

A) Are never recognized as revenue

B) Breakage is recognized in proportion to redemptions

C) Are recognized immediately

D) Are recognized after expiry only

✅ Answer: B

Explanation: Recognize breakage revenue in proportion to redemption pattern if breakage can be reasonably estimated, subject to constraint.

Question 29 💡

Licensing intellectual property where license provides access to IP:

A) Revenue recognized at point in time

B) Revenue recognized over license term

C) Revenue recognized when IP is developed

D) No revenue until license expires

✅ Answer: B

Explanation: When license provides access to entity's IP as it exists throughout license period, revenue is typically recognized over time.

Question 30 🏭

A manufacturer sells equipment with volume discounts (buy 10, get 1 free). This represents:

A) Separate performance obligation

B) Variable consideration

C) Material right

D) Contract modification

✅ Answer: C

Explanation: Volume discounts that provide material rights (options to acquire additional goods/services at discount) are separate performance obligations.

Question 31 📈

Consignment arrangements recognize revenue when:

A) Goods are delivered to consignee

B) Goods are delivered to end customer

C) Consignee pays

D) Consignment period expires

✅ Answer: B

Explanation: In consignment, vendor retains control until goods are sold to end customer - revenue recognized when end customer obtains control.

Question 32 🏢

Customer options to acquire additional goods at significant discount represent:

A) Variable consideration

B) Material rights (separate performance obligation)

C) Contract modification

D) Immaterial items

✅ Answer: B

Explanation: Options providing material rights (discounts customers wouldn't receive without existing contract) are separate performance obligations.

Question 33 🎨

A company acts as agent when it:

A) Controls goods before transfer

B) Arranges for others to provide goods/services

C) Sets the price

D) Has inventory risk

✅ Answer: B

Explanation: Agents arrange for principals to provide goods/services and don't control goods/services before transfer to customer.

Question 34 ⚖️

Principal vs agent determination focuses on:

A) Who gets paid first

B) Whether entity controls goods/services before transfer

C) Contract value

D) Customer relationship

✅ Answer: B

Explanation: Key factor is whether entity controls goods/services before transfer to customer - if yes, principal; if no, agent.

Question 35 🔄

Contract modifications are treated as separate contracts when:

A) Price increases

B) Scope increases by distinct goods/services at standalone selling price

C) Customer requests changes

D) Modification is in writing

✅ Answer: B

Explanation: Separate contract when: (1) scope increases by distinct goods/services AND (2) price increases by standalone selling price of additional goods/services.

🎓 ADVANCED CONCEPTS (Questions 36-50)

Question 36 📊

Portfolio approach can be applied when:

A) Contracts are similar

B) Materially the same outcome as individual contract approach

C) More than 10 contracts

D) All contracts with same customer

✅ Answer: B

Explanation: Portfolio approach allowed if entity reasonably expects outcome wouldn't differ materially from individual contract application.

Question 37 🔍

Contract assets must be tested for impairment under:

A) IFRS 15 only

B) IFRS 9 (expected credit loss model)

C) IAS 36 (general impairment)

D) No impairment testing required

✅ Answer: B

Explanation: Contract assets are subject to impairment under IFRS 9's expected credit loss model, not IAS 36.

Question 38 🏦

When a contract becomes onerous under IFRS 15:

A) Apply onerous contract provisions

B) Continue applying IFRS 15

C) Apply IAS 37 onerous contract provisions first

D) Reverse all revenue

✅ Answer: C

Explanation: If contract becomes onerous, apply IAS 37 first to recognize onerous contract provisions, then continue applying IFRS 15.

Question 39 📈

Series of distinct goods/services can be treated as single performance obligation when:

A) Delivered monthly

B) Each is substantially the same with same pattern of transfer

C) Customer requests it

D) They're all services

✅ Answer: B

Explanation: Series provision applies when each distinct good/service is substantially the same and has the same pattern of transfer to customer.

Question 40 🎯

Disclosure of performance obligations requires:

A) List of all contracts

B) Nature of goods/services, significant payment terms, nature of warranties

C) Customer names

D) Profit margins

✅ Answer: B

Explanation: Disclose nature of goods/services, significant payment terms, nature/terms/conditions of warranties, and related obligations.

Question 41 🏭

Revenue recognized over time using cost-to-cost method:

A) Always provides accurate progress measurement

B) May need adjustment for costs not proportionate to progress

C) Is prohibited under IFRS 15

D) Can only be used for construction

✅ Answer: B

Explanation: Cost-to-cost input method may need adjustment for inefficiencies, wasted materials, or costs not proportionate to progress.

Question 42 📊

Contract balances disclosure requires:

A) Total contract value only

B) Opening balances, changes, closing balances with explanations

C) Customer credit ratings

D) Future contract pipeline

✅ Answer: B

Explanation: Disclose opening balances, changes during period, closing balances for contract assets/liabilities with explanations of significant changes.

Question 43 🔄

Remaining performance obligations disclosure:

A) Required for all contracts

B) May exclude contracts ≤1 year and variable consideration subject to constraint

C) Only for public companies

D) Optional disclosure

✅ Answer: B

Explanation: Practical expedients allow excluding contracts ≤1 year and variable consideration allocated entirely to unsatisfied performance obligations subject to constraint.

Question 44 🏢

Transition to IFRS 15 can use:

A) Retrospective approach only

B) Modified retrospective approach only

C) Either full retrospective or modified retrospective

D) Prospective approach only

✅ Answer: C

Explanation: Entities choose either full retrospective application or modified retrospective application (with practical expedients available).

Question 45 📈

Performance obligation satisfied over time requires:

A) Customer payment over time

B) One of three criteria: consume benefits, customer controls, or no alternative use + payment right

C) Contract term >1 year

D) Multiple deliverables

✅ Answer: B

Explanation: Over time criteria: (1) customer receives/consumes benefits, (2) customer controls asset as created/enhanced, or (3) no alternative use + enforceable right to payment.

Question 46 🎯

Standalone selling prices should be determined:

A) Using list prices only

B) At contract inception using observable prices when available

C) At revenue recognition date

D) Using cost-plus margin only

✅ Answer: B

Explanation: Determine standalone selling prices at contract inception, using observable prices when available, or estimate using suitable methods.

Question 47 🏦

Significant financing components adjust for:

A) Credit risk only

B) Time value of money between payment and performance

C) Currency fluctuations

D) Inflation only

✅ Answer: B

Explanation: Significant financing components adjust promised consideration for time value of money when timingbetween payment and performance is significant.

Question 48 📊

Right to return creates:

A) Variable consideration

B) Refund liability and right to returned goods

C) Contract modification

D) Separate performance obligation

✅ Answer: B

Explanation: Returns create: (1) variable consideration (reduced revenue), (2) refund liability, and (3) asset for right to recover returned goods.

Question 49 🔄

Contract costs to obtain a contract:

A) Are always expensed

B) Are capitalized if incremental and recoverable

C) Are included in transaction price

D) Are disclosed only

✅ Answer: B

Explanation: Incremental costs to obtain contract are capitalized if recoverable (practical expedient: expense if amortization period ≤1 year).

Question 50 🎯

The transaction price includes:

A) Fixed consideration only

B) Fixed plus variable consideration (subject to constraint)

C) All possible variable amounts

D) Only amounts invoiced

✅ Answer: B

Explanation: Transaction price includes fixed consideration plus variable consideration, but only to extent it's highly probable significant reversal won't occur.

🎯 How Did You Score on IFRS 15 Practice Questions?

45-50 Correct: 🏆IFRS 15 Expert! You've mastered revenue recognition

35-44 Correct: 📚 Strong Foundation - Review the concepts you missed

25-34 Correct: 📖 Good Start - Focus on practical applications

Below 25: 🎓 Keep Learning - Review basic concepts and try again

🚀 Next Steps for Students on IFRS 15 Practice Questions

• ✅ Review missed questions and understand the explanations
• ✅ Practice with real company examples from annual reports
• ✅ Join study groups to discuss complex scenarios
• ✅ Follow updates to IFRS 15 from the IASB
• ✅ Apply knowledge in internships or case studies

🎓 Ready to Master IFRS Completely?

These practice questions are just the beginning! Eduyush offers comprehensive IFRS training that will take yourknowledge to the next level:

📚 AICPA IFRS Certification Course 🪙 Cutting-edge topics including crypto accounting 🎯 Real-world case studies and applications 🏆 Preparation for emerging accounting challenges

📚 Diploma in IFRS 🌍 International perspective on evolving standards 💻 Technology-integrated accounting education 👨🏫 Expert instructors who understand innovation

🚀 Transform your understanding of IFRS from basic to expert level with Eduyush!