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 forperformance completed to date (ASC 606-10-25- 29).Taking these two regulations as the basis, the Company's performance obligationmet 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, 20X1Cost of Component Parts Used50,000Direct Cost12,500Recovery Cost if Contact Cancelled12,500Total Revenue75,000Three months ended September 30, 20X1Cost of Component Parts Used200,000Direct Cost50,000
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Recovery Cost if Contact Cancelled50,000Total Revenue300,000Three months ended December 31, 20X1Cost of Component Parts Used750,000Direct Cost187,500Recovery Cost if Contact Cancelled187,500Total Revenue1,125,000
Generally Accepted Accounting Principles, International Financial Reporting Standards, Financial Accounting Standards Board, Village Apartments
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