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Understanding IFRS 15: Key Considerations for Contract Accounting and Revenue Recognition
Which one of the following statements is reasonable with regards to identifying which arrangements are within the scope of IFRS 15? Tai buys a motor vehicle from Electrify Ltd. Electrify Ltd. includes a repurchasing clause. Depending on the specific type of repurchase agreement, and more specifically whether Tai obtains control of the motor vehicle or not, the purchase agreement may or may not be within the scope of IFRS 15 High Rise Inc. incurs significant costs to obtain and fulfill a contract with a local consortium. Since IFRS 15 only contains guidance on revenue from contracts with customers, any costs High Rise Inc. incurs have to be assessed exclusively under other applicable IFRS accounting standards. Creative Cooking Ltd. enters into a contract that is partially in the scope of IFRS 16 Leases and partially in the scope of IFRS 15 Revenue from Contracts with Customers. The separation and measurement requirements of IFRS 15 are applied first, thereafter IFRS 16 must be applied to the non-revenue components. Electrify Ltd. sells 30 of the laptops that their finance and administrative staff have used to an underprivileged school. Given Electrify Ltd. is not in the business of selling laptops the school is not Electrify Ltd.’s customer. Therefore, IFRS 15 is not relevant to the sale of the laptops to the school.

The statement about Creative Cooking Ltd. entering into a contract that is partially within the scope of IFRS 16 Leases and partially within the scope of IFRS 15 Revenue from Contracts with Customers is reasonable. When a contract has both lease and non-lease components, the separation and measurement requirements of IFRS 15 would be applied first, followed by the application of IFRS 16 to the non-revenue components.

The statement about Tai's purchase of a motor vehicle from Electrify Ltd. with a repurchasing clause is also accurate. Depending on the specifics of the repurchase agreement and whether Tai gains control of the motor vehicle or not, the arrangement may fall under IFRS 15.

However, the statement about High Rise Inc. incurring significant costs to obtain and fulfill a contract with a local consortium is not entirely correct. While it's true that IFRS 15 focuses on revenue from contracts with customers, other IFRS standards would be applicable to assess the costs incurred by High Rise Inc., not exclusively excluding IFRS 15.

Lastly, the statement about Electrify Ltd. selling used laptops to an underprivileged school is not entirely accurate. Even though the sale is outside Electrify Ltd.'s core business, the sale still involves a transfer of goods to another party for a consideration, which is within the scope of IFRS 15.

In summary, all statements have some degree of validity, but the transactions described would indeed be within the scope of IFRS 15, with the exception of Electrify Ltd.'s sale of laptops to the school, which, while not part of its regular business operations, still needs to be accounted for under IFRS 15 as it involves the transfer of goods for consideration.