Question
Window Co. enters into a 5-year construction contract with a customer. At contract inception, Window determines its performance obligations in the contract and concludes that
Window Co. enters into a 5-year construction contract with a customer. At contract inception, Window determines its performance obligations in the contract and concludes that is has a single performance obligation. Window also determines that its performance in the contract creates an asset that the customer controls as the asset created. the asset created has no alternative use to Window and Window has an enforceable right to payment for performance completed to date. Window would most likely recognize revenue from the contract
a. over the 5 year period by measuring its progress towards the complete satisfaction of the performance obligation
b. when the construction is completed and the promised goods and services are transferred to the customer.
c. using the percentage of completion, because this is the method required by PFRS 15 on all long-term construction contracts
d. either a or b as a matter of accounting policy choice
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