When Using the Cost Recovery Method of Accounting for Long-Term

question 121

Multiple Choice

When using the cost recovery method of accounting for long-term contracts under IFRS, early in the life of the contract it is typically the case that:

• A)Expenses in excess of revenues are recognized.
• B)Revenues in excess of expenses are recognized.
• C)An equal amount of revenue and expense is recognized.
• D)There is no predictable pattern of revenue and expense.

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Definitions:

Leachate

Liquid that has percolated through a solid and leached out some of its constituents, often used in the context of water passing through waste material in landfills.

Contaminated Water

Water that has been polluted by chemical substances, bacteria, or other pathogens, making it unsafe for human consumption and use.

Percolates

The movement of water or other liquids through a porous medium, often referring to the process of water filtering through soil layers.

Primary Recycling

The process of recycling a material into a new product of the same type, like using recycled aluminum cans to make new aluminum cans.