If a contract involves a significant financing component
A) the time value of money is not required to determine transaction price if the payment is more than a year after the transfer occurs.
B) the transaction amount should be based on the current sales price of goods or services.
C) interest is not accrued as a result of the financing component.
D) the time value of money is used to determine the fair value of the transaction.

Question

Quizplus · Accepted Answer

The time value of money is considered to adjust the transaction price to reflect the financing component, ensuring the transaction price represents the fair value of the goods or services provided, taking into account the financing provided by either party.

If a Contract Involves a Significant Financing Component