Exam 4: Revenue

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

Orange Pty Ltd develops and sells off-the-shelf accounting software packages. The retail price of each package is $399 (GST inclusive). Included with each purchase are "free" upgrades for a period of 12 months after the date of purchase. These upgrades can be purchased separately for $80 (GST inclusive). At the date of purchase of the software package by a customer, Orange should record revenue of:

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:

The following information relates to questions 16 and 17 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:

Easter Pty Ltd operates a facility making chocolate Easter eggs. Easter has a policy that all unsold chocolate eggs can be returned for a full refund within 1 week of Easter Sunday. On 1 March 2014, Easter sold 500 pallets of packaged eggs at $100 per pallet. Historical data indicates that 20% of the stock will be returned for a refund. Within one month of Easter Sunday (by the end of April 2014) 10% of the eggs were retuned for refund. Using the expected sales approach, how much revenue would be recognised by Easter at the end of April 2014?

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

Which of the following items are defined in IAS 18?

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:

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 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 totalled $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: