One Approach to Revenue Recognition Proposed for Biological Assets Is

question 24

Multiple Choice

One approach to revenue recognition proposed for biological assets is to recognise volume changes as revenue or expense but to treat price changes as an adjustment to equity through a reserve.Arguments that support this approach include:

• A) Price changes have not been realised and so should not be recognised in the income statement.
• B) Treating price changes as a non-distributable reserve protects the operating capability of the entity.
• C) The biological development of a self-generating and regenerating asset is clearly distinguishable and separately measurable from changes in price.
• D) The treatment should be equivalent to that used in other reporting standards such as AAS 25 'Financial Reporting by Superannuation Funds'.
• E) None of the given answers.

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Definitions:

Rank Order

The hierarchical arrangement of items or individuals based on certain criteria, reflecting their relative positions or importance.

Results-Oriented Structure

An organizational design that focuses on outcomes and results, rather than processes or inputs.

Internal Organisational

Pertaining to the inner workings and structures within an organization, such as its culture, policies, and procedures.

Elevating Goal

A strategy of setting increasingly higher objectives to motivate and improve team or individual performance.