Use the Following to Answer Questions

question 190

Multiple Choice

Use the following to answer questions
Sahara Desert Homes (SDH) reports under IFRS and constructed a new subdivision during 2015 and 2016 under contract with Cactus Development Co.Relevant data are summarized below:
SDH uses the cost recovery method under IFRS to recognize revenue.
-In its December 31,2015,balance sheet,SDH would report:

• A)The asset,cost and profits in excess of billings,of $500,000.
• B)The liability,billings in excess of cost,of $300,000.
• C)The asset,contract amount in excess of billings,of $1,500,000.
• D)The asset,deferred profit,of $400,000.

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Definitions:

Operating Activities

Activities directly related to the operating aspect of a business, such as selling products, managing costs, and paying salaries.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life.

Operating Activities

Business functions directly related to providing goods or services, such as sales, production, and day-to-day administration.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset’s consumption or wear and tear.