True or False: Explain:
Use the following information for the next three questions:
Patricia and Anna enters into a contract to contribute cash to acquire a taxi. Patricia and Anna will have joint control over the operation of the taxi and will share equally in the revenues and expenses.
1. The contract between Patricia and Anna is a joint venture.
2. Patricia and Anna are referred to as a joint taxi venturers.
3. The taxi is referred to in IFRS 11 as separate vehicle.
4. Joint control exists when no single party is in position to control the activity unilaterally.
5. Joint control distinguishes an interest in a joint arrangement from other types of investment.
6. Tallmart enters into a contract to build a house for a customer. The contract identifies the customer as the 'owner' and is entitled to any asset created in case the contract is terminated before completion. Tallmart's performance obligation is most likely to be one that is satisfied at a point in time.
Fact pattern:
Tine, a construction firm, uses the percentage of completion method to account for its construction contracts. Tine measures its progress on a contract using the "cost-to-cost" method. During the year, Entity A started work on a P10M fixed price contract asnd incurred contract costs of 4M. the estimated total contract costs are 8M.
7. Tine recognizes zero revenue for the year because the contract is not yet complete.
8. Tine recognizes gross profit of 1M for the year.
9. the percentage of completion under a construction contract is always computed based on the cost s incurred to date as they bear to expected total costs at completion.