Exam 5: Revenue

Special Limited is in the business of producing and distributing special screenings on various topics. On 1 January 2014, Special granted a license to TV 101 for $250 000 in relation to a special titled "The Big Ice". The following conditions were attached to the license: • TV 101 was allowed to show the special once only within the 2014 calendar year. • TV 101 could choose the date and time of the screening. The documentary was delivered to TV 101 on 1 January 2014. TV 101 screened the documentary on 30 March 2014. The $250 000 fee was paid to Special on 30 March 2014. Special should recognise revenue as follows:

On 1 July 2010 ABC Ltd purchased a 5-year $1000 5% debenture for $957.88. The current market rate of interest is 6%. The maturity date is 30 June 2015. Interest is payable annually on 30 June. The interest income that ABC would recognise for the year ended 30 June 2011 is:

Which of the following are excluded from the scope of AASB 118? I the initial recognition of agricultural produce II insurance contracts within the scope of AASB 4 III the extraction of mineral ores IV lease agreements

The introduction of IFRIC 13 Customer Loyalty Programmes had the following impact on revenue recognition policies for entities in the airline industry:

On 1 January 2014 ABC Ltd sold goods to ZZZ Pty Ltd for a total price of $1 000. Under the terms of the sale ZZZ is able to return the goods within five days of delivery. On 3 January 2014 ZZZ returned 30% of the goods. ABC would recognise revenue as follows:

The two elements of performance referred to in the Conceptual Framework are:

Which of the following is incorrect in relation to consignment sales?

Which of the following disclosures are required under AASB 118? I total income, allocated between revenue and other gains II the accounting policies adopted for revenue recognition III the amount of each significant category of revenue recognised during the period IV the amount of revenue arising from exchanges of goods and services.

The following information relates to questions TelCo provides a bundled service offering to a customer for $3000 upfront. The services provided are as follows: • Upfront advice • ‘on-call’ advice • Database access for a 2-year period If TelCo were to charge a separate fee for each service if sold separately the fee would be: Up-front advice $200 On-call advice $2600 Database access $800 -Using the relative fair value approach the amount of revenue recognised in relation to the on-call advice is:

The IASB/FASB Exposure Draft titled Revenue from Contracts with Customers is inconsistent with the principles within which of the following?

Big Bank Limited provides Good Sport Pty Ltd with a five-year loan to finance the construction of a new sporting stadium. Good Sport had the choice of paying a market rate of interest (7.5% at the inception of the loan) or paying interest at a rate of 1.5% below the market rate, and paying in addition a fixed 'arrangement fee' of $200 000 to compensate Big Bank for charging an interest rate below the fair market value. Good Sport chose the second option. Big Bank should recognise revenue from the arrangement fee as:

ACC, a professional body charges an annual fee of $600 for subscription to its publications. The $600 fee entitles customers to receive a copy of the latest version of the professional standards relevant to their industry (updated annually). Subscribers also receive monthly newsletters for the duration of the subscription period. ACC should recognise the $600 as follows:

The Appendix to AASB 118 contains illustrative examples which:

Under AASB 118 interest revenue is recognised as follows:

The following information relates to SellIT: • 5000 units of stock were sold for $10 per unit • the cost of that stock to SellIT was $4.50 per unit • other costs incurred during the period totaled $10 000 • proceeds on sale of an item of plant during the period was $2000 • the carrying amount of the plant at the date of disposal was $500. SellIT would recognise the following amount as revenue for the period:

Deefer Limited sold an item of machinery on 1 July 2013 on the following terms: • Initial payment of $25 000 • Annual payments of $25 000 for 5 years (total $125 000). The buyers incremental rate of interest is 7.5% and the present value of the future annual payments is $101 147. At 30 June 2014 Deefer would recognise interest revenue of:

Which of the following is NOT an example of an entity retaining significant risks and rewards of ownership?

Which of the following is NOT a condition that needs to be satisfied prior to recognising revenue from the rendering of services using the 'percentage of completion' method?

Deefer Limited sold an item of machinery on 1 July 2014 on the following terms: • Initial payment of $25 000 • Annual payments of $25 000 for 5 years (total $125 000). The buyers incremental rate of interest is 7.5% and the present value of the future annual payments is $101 147. At the time of sale of the machine Deefer would recognise revenue of:

Which of the following is NOT excluded from the scope of AASB 118 Revenue?