Disclosures concerning significant judgments include all of the following except
ID: 2574687 • Letter: D
Question
Disclosures concerning significant judgments include all of the following except______.
information regarding fair value of consideration exchanged
methods used to recognize revenue
allocation of the transaction price
an assessment of whether an estimate of variable consideration is constrained
A.information regarding fair value of consideration exchanged
B.methods used to recognize revenue
C.allocation of the transaction price
D.an assessment of whether an estimate of variable consideration is constrained
Explanation / Answer
Let us discuss each option in detail and then come to the correct option:
A. Information regarding fair value of consideration exchanged: Fair value of consideration exchanged depends on the market value of the assets exchanged. It does not involve any judgement of the accountant or auditor. It is the disclosure of a factual information and not a judgement.
B. Methods used to recognize revenue: The method used to recognize the revenue in the books of accounts depends upon the judgement of the accountant. So, the disclosure about the method of recognizing revenue is concerened with a significant judgement.
C. Allocation of transaction price: How much price out of the total transaction price is to be allocated to particular item is purely a judgemental decision on the part of an accountant.
D. An assessment of whether an estimate of variable consideration is constrained: It is also judgemental decision to be taken by the acoountant as the assessment of the estimate of variable consideration vary from person to person. There are many ways to make such assessment.
Considering above, dislosures for Option B,C & D are concerned with significant judgements. hence, Option A is the correct answer as it is not based on the judgement but a disclosure of fact.
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