c The entitys performance does not create an asset with an alternative use to

C the entitys performance does not create an asset

This preview shows page 3 - 4 out of 4 pages.

c. The entity’s performance does not create an asset with an alternative use to the entity (ASC 606-10-25-28), and the entity has an enforceable right to payment for performance completed to date (ASC 606-10-25- 29). Taking these two regulations as the basis, the Company's performance obligation met the criteria of recognizing revenue over time as it has fulfilled one of the criteria. This entails that the construction company is purchasing material and using it for the construction of Village Apartments building. Therefore, Village Apartments will have to pay for only those materials used in the construction so far. Though, Village Apartments is not required to pay for the inventory in stock for the performance made up to date. Amount of Revenue Recognized Three months ended June 30, 20X1 Cost of Component Parts Used 50,000 Direct Cost 12,500 Recovery Cost if Contact Cancelled 12,500 Total Revenue 75,000 Three months ended September 30, 20X1 Cost of Component Parts Used 200,000 Direct Cost 50,000
Image of page 3

Subscribe to view the full document.

Recovery Cost if Contact Cancelled 50,000 Total Revenue 300,000 Three months ended December 31, 20X1 Cost of Component Parts Used 750,000 Direct Cost 187,500 Recovery Cost if Contact Cancelled 187,500 Total Revenue 1,125,000
Image of page 4
  • Fall '09
  • PROFESSORHIUELIESUN
  • Generally Accepted Accounting Principles, International Financial Reporting Standards, Financial Accounting Standards Board, Village Apartments

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes