If the Builder Breaches a Construction Contract Either Before or During

question 47

True/False

If the builder breaches a construction contract either before or during construction, the owner can recover the increased cost above the contract price that he or she has to pay to have the work completed by another contractor.

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Definitions:

Original Cost

The initial purchase price or cost of acquiring an asset, before any depreciation or amortization.

Accounting Period

A specific period of time in which financial transactions are recorded and financial statements are prepared.

Prepaid Rent Expense

An account representing rent payments made in advance for future periods, which is gradually expensed over the benefit period.

Contra-Asset

An asset account where the balance is expected to be a debit balance but is instead a credit balance, such as accumulated depreciation.