12-17-2009, 01:39 PM
Entity A purchased land to construct a new factory. The land was formerly used for agricultural purposes. A's management has
applied to the local authorities forn permission to change the
use of the land from agrricultural to industrial. The process
is expected to last six months, because of opposition from
local residents.
Management has financed the purchase with a bank loan, which will be repaid over a period of seven years, commencing from the scheduled date of completion of the factory. Management is confident that
the authorities will approve the change the use of the land because
the new factory will bring 1,000 new jobs to the area.
(required)-Can management recognize revenue before physical construction of asset and if yes what will happen if the approval is not granted afterwards? (marks 05)
applied to the local authorities forn permission to change the
use of the land from agrricultural to industrial. The process
is expected to last six months, because of opposition from
local residents.
Management has financed the purchase with a bank loan, which will be repaid over a period of seven years, commencing from the scheduled date of completion of the factory. Management is confident that
the authorities will approve the change the use of the land because
the new factory will bring 1,000 new jobs to the area.
(required)-Can management recognize revenue before physical construction of asset and if yes what will happen if the approval is not granted afterwards? (marks 05)
