Under the AASB (IASB)Conceptual Framework income is now subdivided into:
A) revenues, which only include sales, fees, interest, dividends, royalties and rent; gains, which are no different in nature to revenue.
B) gains, which are regarded as constituting a separate element in the framework; revenues, which may only arise in the course of the ordinary activities of the entity.
C) revenues, which arise in the course of the ordinary activities of the entity; gains, which may or may not arise in the course of the ordinary activities of the entity.
D) increases in equity referred to as gains; reductions in liabilities which are classified as revenues.

Question

Quizplus · Accepted Answer

The AASB (IASB) Conceptual Framework subdivides income into revenues, which arise in the course of the ordinary activities of the entity, and gains, which may or may not arise in the course of the ordinary activities of the entity. This differentiation is important for proper recognition, measurement and disclosure of the entity's performance. Option A is incorrect as it incorrectly states that gains and revenues are no different in nature. Option B is incorrect as it limits revenues to only arising in the course of the ordinary activities of the entity. Option D is incorrect as it incorrectly states that gains represent increases in equity and revenues are reductions in liabilities.

Under the AASB (IASB)Conceptual Framework Income Is Now Subdivided Into