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:

Trading Debt Securities

The buying and selling of debt investments like bonds, often for speculation or income generation.

Stock Investments

Financial assets representing shares of ownership in a company, acquired for income or capital appreciation.

Profit Margin

A financial metric used to evaluate a company's profitability by comparing net income to revenue, often expressed as a percentage.

Total Asset Turnover

Total Asset Turnover is a financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue.