Which Accounting Method Is Permitted Under ASPE for Construction Contracts

question 43

Multiple Choice

Which accounting method is permitted under ASPE for construction contracts in limited circumstances?

• A)An accounting method that recognizes revenue and expenses on a cash basis.
• B)An accounting method that recognizes revenue and expenses only after it is completed.
• C)An accounting method that recognizes costs as incurred and an amount of revenue equal to the costs that are expected to be recovered on the contract.
• D)An accounting method that recognizes revenue and expenses based on the fair value of the contract.

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Definitions:

Personal Property

Refers to movable items owned by an individual or a corporation, including furniture, vehicles, electronics, stocks, and intellectual property, as opposed to real property like land or buildings.

Real Property

Refers to land and anything permanently attached to it, such as buildings, in contrast to personal property.

Tangible Property

Physical assets that can be touched and seen, such as real estate, vehicles, furniture, and other material possessions.

Wild Animal

An animal that is not domesticated and lives independently of human control or ownership, often subject to specific legal considerations.