Happy Days 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 $4 million, a market value at 30 June 2001 of $4.5 million, and was sold for $6 million. What is the revenue of the superannuation plan for the period in accordance with AAS 25?

Question

Happy Days 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 $4 million, a market value at 30 June 2001 of $4.5 million, and was sold for $6 million. What is the revenue of the superannuation plan for the period in accordance with AAS 25?

Quizplus · Accepted Answer

According to AAS 25, gains and losses on the disposal of property, plant, and equipment should be included in revenue or expenses, depending on their nature. In this case, the land was acquired before 30 June 2001, meaning it was held for investment purposes. As such, the gain on the sale of the land should be recognized as revenue.

The revenue from the sale of the land would be calculated as follows:

Sale proceeds: $6,000,000
Less: Carrying amount of land (cost): $4,000,000
Plus: Revaluation increment to carrying amount at date of revaluation: $500,000
Gain on disposal of land: $2,500,000

Therefore, the revenue of the superannuation plan for the period would be the sum of the gain on disposal ($2,500,000) and the total of the other receipts shown in the table ($8,581,000), which equals $11,081,000 (Option C).

Happy Days Superannuation Plan Provides the Following Information Regarding Its