1. Discuss the core principle of IFRS (PFRS 15).

The core principle of IFRS 15 is that an entity will recognize revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. In other words, the
core principle of IFRS 15 is that, revenue is recognized when the goods or services are
transferred to the customer, at the transaction price. Revenue is recognized in accordance with
that core principle by applying a 5 step model.
Step 1: Identify the contract with the customer.
Step 2: identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations.
Step 5: Recognize revenue when (or as) a performance obligation is satisfied.

2. Discuss what is installment sales? Installment method of accounting?

Installment sales is basically a buy now and pay later policy of the seller, which allow the
purchaser to make payment for the goods in installments and to obtain the goods in the start of
the period and in this method of sales, proceeds from sales, and expenses are not recorded at
the time of sales, but these are recorded at the time of collection of cash. Installment sales is a
marketing strategy widely used by dealers of home appliances, cars, and real estate. Since it
takes a longer period to collect the full amount due, it is an accepted trade practice to include
interest charges for the unpaid / outstanding balance.

The installment sales method of accounting is a special case of revenue recognition that
deviates from the revenue recognition principles of PFRS 15. This method may be used for
taxation purposes or when the entity is a "micro entity" and has opted to use the income tax
basis of accounting. Under the installment sales method, the gross profit from an installment
sale is initially deferred and subsequently realized on a piecemeal basis as the installment
payments are received using the formula: 
Realized Gross Profit = Collection on Sale x Gross Profit Rate
Gross Profit Rate = Gross Profit / Total Sales

3. Explain The Cost Recovery Method.

The cost recovery method of revenue recognition is a concept in accounting that refers to a
method in which a business does not recognize profit related to a sale until the cash collected
exceeds the cost of the good or service sold. Cost recovery is a method of accounting in which a
business only records the revenue it earns from a transaction at the time that the client has paid
enough of the invoice that the business has recouped all its costs on the transaction. The cost
recovery method is a way of recognizing and classifying revenue in accounting.

1. What is joint arrangement and state its characteristics.

Joint arrangement is an arrangement of which two or more parties have joint control.

Characteristics of a Joint Arrangement

1. The parties are bound by a contractual arrangement.

A contractual agreement for the sharing of joint control over an investee distinguishes an interest in a
joint arrangement from other types of investments, such as investment in equity securities measured at
fair value, investment in associate, and investment in subsidiary.

2. The contractual arrangement gives two or more of those parties joint control of the arrangement.

Joint control is "the contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require the unanimous consent of the parties sharing control."

2. What is joint operations?

Joint operation is a joint arrangement whereby the parties that have joint control of the arrangement
have rights to the assets and obligations for the liabilities, relating to the arrangement. Joint operation
recognize its own assets, liabilities, income and expenses plus share in the assets, liabilities, income and
expenses.

3. Differentiate between joint operation and a joint venture.

Joint operation is a joint arrangement whereby the parties that have joint control of the arrangement
have rights to the assets and obligations for the liabilities, relating to the arrangement. Those parties are
called joint operators. Joint venture is a joint arrangement whereby the parties that have joint control of
the arrangement have rights to the net assets of the arrangement. Those parties are called joint
venturers.

The key distinction between a joint operation and a joint venture is that a joint venturers has rights to
the net assets of a joint venture. In contrast, for a joint operation, the parties that have a joint control
over the arrangement have rights to the assets, and obligations for the liabilities, of the arrangement.

4. Describe the accounting requirements for joint venture.

An entity first applies PFRS 11 to determine the type of arrangement it is involved in. If the arrangement
is a joint venture, the entity recognizes its interest as an investment and account for it using the equity
method under PAS 28 Investments in Associates and Joint Ventures.

Under the equity method, the investment is initially recognized at cost and subsequently adjusted for
the investor's share in the investee's changes in the equity, such as profit or loss, other comprehensive
income, dividends, and results of discontinued operation.