Financial Reporting And Analysis - Financial Reporting And Analysis Section 1
- Option : C
- Explanation : IFRS makes a distinction between unrealized gains and losses on available-for-sale debt securities that arise as a result of exchange rate movements and requires these changes in value to be recognized in the income statement, whereas U.S. GAAP does not make this distinction.
- Option : A
- Explanation : When subtotals are presented, the income statement follows a multi-step format.
| All figures in millions | Year 1 | Year 2 | Year 3 |
| Costs incurred and paid | $2.2 | $3.5 | $3 |
| Amounts billed and payments received | $3.5 | $4.1 | $3.6 |
If the company uses the percentage-of-completion method, the amount of revenue recognized (in millions) in Year 2 is closest to:
- Option : A
- Explanation : The revenue reported is equal to the percentage of the contract that is completed in that period, where percentage completion is based on costs. In Year 2: (3.5 / 8.7) * 11.2 = 4.5.
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