Business B enters into a contract to construct an asset for Company Y. The asset will take
Question:
Business B enters into a contract to construct an asset for Company Y. The asset will take eight weeks to construct and payment will be made at the end of the eight-week period when Company Y receives the asset. However, Company Y is required to pay a deposit at the start of the contract. If the customer terminates the contract before its completion, Business B is only entitled to this deposit. When would business B recognize revenue from this contract? Select one:
a. When the asset Business B creates has no alternative use to Company Y
b. When construction of the asset completed to the customer’s initial specification
c. When the risks and rewards of ownership have transferred to the customer
d. Over the eight-week construction period, in line with the work Business B is carrying out