Long-lived Superannuation Plan provides the following information regarding its assets and receipts for the year ended 30 June 2002:

During the period, land acquired before 30 June 2001 was sold. The land had a cost of $1 million, a market value at 30 June 2001 of $2 million, and was sold for $2.8 million. What is the revenue of the superannuation plan for the period in accordance with AAS 25?

Question

Long-lived Superannuation Plan provides the following information regarding its assets and receipts for the year ended 30 June 2002:

During the period, land acquired before 30 June 2001 was sold. The land had a cost of $1 million, a market value at 30 June 2001 of $2 million, and was sold for $2.8 million. What is the revenue of the superannuation plan for the period in accordance with AAS 25?

Quizplus · Accepted Answer

According to AAS 25, revenue is recognised when it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. In this case, the land was sold for $2.8 million, which is higher than its market value at the end of the previous year ($2 million), indicating that the economic benefits will flow to the entity. 
The revenue recognised would be the proceeds from the sale of the land, which is $2.8 million. Therefore, the correct answer is B) $3,678,000, which is the sum of the proceeds from the sale of land ($2.8 million) and the other investment income ($878,000) as shown in the table.

Long-Lived Superannuation Plan Provides the Following Information Regarding Its Assets