Income

Question 1

definition of income

Answer 1

increase in economic benefits, inflow/enhancement of assets, decrease in liabilities
- income is made up of revenue of gains (I=R+G)

Question 2

Exchange/Swap

Answer 2

• if a swap/exchange is of similar nature then transaction doesn’t generate revenue
• if swap/exchange is not for similar goods then this transaction generates revenue

Question 3

Sale of Goods: revenue from the sale of goods following conditions need to be satisfied:

Answer 3

• risk and rewards of ownership has been transferred
• entity retains no managerial involvement
• amount of revenue can be reliably managed
• probably that benefits will flow to the seller
• costs of the transaction can be measured reliably

Question 4

Interest

Answer 4

revenue is recognised on a time-proportion basis using an effective interest method

Question 5

Dividend

Answer 5

revenue is recognised when the shareholders right to receive this dividend is established, when directors declare dividend

Question 6

Royalties

Answer 6

fees earned for allowing another party to use the entities intangible assets: copyrights, trademarks, brand names

Question 7

Multiple Element Arrangmenent

Answer 7

treated on a percentage allocation basis