Which of the Following Statements Is Incorrect with Respect to Revenue

question 24

Multiple Choice

Which of the following statements is incorrect with respect to revenue recognition of construction contracts?

• A)The percentage-of-completion method is to be applied for fixed price contracts if the recognition criteria are satisfied.
• B)IASB (2011) Revenue from Contracts with Customers requires individual construction contracts to be accounted for separately and the requirements of the standard to be applied separately to each contract.
• C)The percentage-of-completion method should be used, provided certain conditions are met that enable the outcome of the contract to be reliably measured.
• D)Percentage-of-completion method requires contract revenue to be matched with progress billings, resulting in the reporting of revenue, expenses and profit which can be attributed to the amount billed to customers.

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Definitions:

360-Day Year

A financial convention that simplifies the calculation of interest by assuming a year has 360 days.

Retail Gift Stores

Commercial establishments focusing on selling various gift items including souvenirs, handmade crafts, and other unique products to customers.

Ordinary Simple Interest

Interest calculated on the principal amount of a loan or investment, based on a 360-day year.

Ordinary Simple Interest

A method for calculating the interest charge on a loan or investment based on the original principal, rate, and length of time, without compounding.