S1: Under Ind AS 115, if a contract contains multiple performance obligations, the transaction price must be allocated to each obligation based on their relative standalone selling prices. S2: If the standalone selling price is not directly observable, the entity must estimate it using the adjusted market assessment approach or the expected cost plus a margin approach. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: Under Ind AS 115, if a contract contains multiple performance obligations, the transaction price must be allocated to each obligation based on their relative standalone selling prices. S2: If the standalone selling price is not directly observable, the entity must estimate it using the adjusted market assessment approach or the expected cost plus a margin approach. Which statement(s) is/are correct?
A. S2 only
B. S1 only
C. Neither S1 nor S2
D. Both S1 and S2
Answer: Option D
Solution (By JKSSB Mock Tests)
Both statements are correct as per Ind AS 115. The transaction price must be allocated based on standalone selling prices, and if not directly observable, the entity must estimate it using approved methods like adjusted market assessment or expected cost plus margin.
S1: The Profit and Loss Appropriation Account is prepared by a partnership firm. S2: It is prepared to distribute the net profit among the partners. Which statement(s) is/are correct?
Explanation:
A partnership firm prepares a Profit and Loss Appropriation Account after the Profit and Loss Account. Its purpose is to distribute the net profit among partners by accounting for interest on capital, salaries, and profit shares. Both are correct.
Assertion (A): Under Ind AS 107, an entity must disclose information that enables users to evaluate the significance of financial instruments for its financial position. Reason (R): This includes disclosing the nature and extent of risks arising from financial instruments. Choose the correct option.
A.Both A and R are true but R is NOT the correct explanation of A
B.Both A and R are true and R is the correct explanation of A
Explanation:
Ind AS 107 requires extensive disclosures about financial instruments. The primary goal is to help users evaluate their significance, which inherently requires disclosing the nature and extent of risks (credit, liquidity, market) associated with them. R correctly explains A.
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