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Sir..Suppose for a question on ethical threat, if the threat is self interest, shall I provide 2 safeguard..
Like auditor as NED which creates self interest threat (1 mark)
Safeguard : politely decline the invitation since no safeguard can reduce the threat
Safeguard: if the appointment to go ahead, resign as the partner
Can I get 2 marks for 2 safeguard, but only 1 threat
Suppose, revenue 30% received in advance from customer and rest 70% will be paid later after the completion of contract.
if on a % of completion basis (performance obligation over period), can I recognise the 30% as and when received and, the rest 70% at a later stage when the control is passed. Is there any early revenue recognition risk in this issue.
Sir, Is my understanding correct? If not please advise..
For marking advice please see the sticky/starred posts on this forum – like this one “This was the most productive 1 hour I had in the preparation for the exam!” and “Read the mind of an AAA marker – ESSENTIAL READING”.
There may be NO safeguards sufficient to reduce a threat to an acceptable level – see Example 1 on page 27 of the notes – clearly there can be no marks for suggesting safeguards in this case.
Cannot recognise any % in advance if there is not proportionate performance – the customer’s prepayment is a liability/deferred income.