Question

In which of the following scenarios would ifrs 15 require the entities to combine the contracts and account for them as a single contract?

a. on 15 september, interior supply world ltd. entered into contracts with three interior design companies, beautiful interiors inc., indoor world ltd. and glamour ltd. to supply furniture and décor accessories for home interiors. the three interior design companies are unrelated parties.

b. on 29 august project ltd. entered into three separate contracts with learning inc. each contract has different characteristics and commercial objectives and consideration for each contract is independent of the other contracts. the goods and services are not one performance obligation.

c. on 10 may, security for you ltd. entered into two contracts with daisy retirement village ltd. the two contracts, required solely for internal management reasons, were negotiated for the purpose of installing a security alarm system complete with panic buttons and 24/7 alarm monitoring.

d. on 16 october, carpet ltd. entered into a contract with secure it inc. to carpet secure it inc.’s alarm monitoring control office with industrial style carpet tiles. ten months later carpet ltd. entered into another contract to carpet secure it inc.’s head office with underlaid carpet.

Answer 1

In accordance with IFRS 15, contracts must be combined and accounted for as a single contract in certain scenarios. Option A and Option B both meet the criteria for combining contracts.

Step-by-step explanation:

In accordance with IFRS 15, entities are required to combine contracts and account for them as a single contract in certain scenarios. In the given scenario, Option A meets this criterion as Interior Supply World Ltd. entered into contracts with three unrelated interior design companies to supply furniture and décor accessories for home interiors.

Another scenario that would require the combination of contracts is when the contracts have different characteristics, commercial objectives, and independent consideration. Option B meets this criterion as Project Ltd. entered into three separate contracts with Learning Inc.

Each with different characteristics and commercial objectives, and independent consideration for each contract. Therefore, the correct options that would require combining the contracts and account for them as a single contract in accordance with IFRS 15 are Option A and Option B.