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Considering what you have learned about the scope of IFRS 15, which of the statements below is accurate?

Select the best option.

A. Roadside assistance programs and maintenance contracts, in which the service provider agrees to repair specified equipment after a malfunction for a fixed fee, would be scoped into IFRS 15 when IFRS 17 supersedes IFRS 4.

B. When a company sells old equipment to dispose of it and the sale is unrelated to its ordinary business, it needs to apply IFRS 15's recognition and measurement requirements to any gain or loss on the equipment's disposal.

C. A sale agreement, including a repurchase option for a cell phone company to repurchase a cell phone sold to its customer, always falls outside the scope of IFRS 15.

D. Where a contract is partially within the scope of IFRS 15 and partially within the scope of another standard, IFRS 15 is applied first.

Answer :

To determine which of the statements about the scope of IFRS 15 is accurate, let's break down each option based on what IFRS 15 covers.

  1. Option A: Roadside assistance programs and maintenance contracts are typically not directly within the scope of IFRS 15. While IFRS 15 covers revenue from contracts with customers, it does not specifically address insurance contracts, which might be the case here if these services include some form of risk protection. IFRS 17 would be relevant for insurance contracts, so the statement is not accurate.

  2. Option B: IFRS 15 is primarily concerned with revenue from contracts with customers. If a company is selling old equipment, and this sale is not part of its ordinary business operations, then IFRS 15's recognition and measurement criteria would not typically apply to a gain or loss on the disposal of the equipment. Instead, this would be covered under the requirements of IAS 16 or IFRS 9. Therefore, this statement is not accurate.

  3. Option C: A sale agreement with a repurchase option can be scoped under IFRS 15, depending on the circumstances. The existence of a repurchase option does not automatically exclude a transaction from IFRS 15, but it may alter the accounting treatment under that standard. Therefore, this statement is not always accurate in saying it 'always falls outside' the scope.

  4. Option D: When a contract partially falls within the scope of IFRS 15 and another standard, the guidance generally suggests applying the standards separately for the portions of the contract they cover. However, IFRS 15 often states that if another standard provides more specific guidance on a certain component of the transaction, that specific guidance should be applied first. Therefore, this does not directly imply IFRS 15 is always applied first.

Based on this analysis, none of the statements perfectly capture the requirements of IFRS 15 as they stand. However, Option D is the closest as it hints towards the application guidelines of standards overlapping. But, it's not fully accurate in stating IFRS 15 is always applied first.

For a precise answer, you might consider option D as having some relevance, but with the caveat of understanding the context and specifics of standard application.

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