If a Contract Involves a Significant Financing Component

question 10

Multiple Choice

If a contract involves a significant financing component

• A) the time value of money is not required to determine transaction price if the payment is more than a year after the transfer occurs.
• B) the transaction amount should be based on the current sales price of goods or services.
• C) interest is not accrued as a result of the financing component.
• D) the time value of money is used to determine the fair value of the transaction.

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Definitions:

Highly Subjective

Pertaining to or influenced by personal feelings, tastes, or opinions to a great extent.

Cultural Heritage

The legacy of physical artifacts and intangible attributes of a group or society passed from generation to generation.

Unconscious Motivation

Psychological forces and desires not within one's conscious awareness that influence behavior and decision-making processes.

Sociohistorical Context

The social and historical background or environment that influences and shapes events or phenomena.