00:01
So this question is talking about contract costs in relation to a customer.
00:21
And then it wants to know which of the following is correct.
00:27
So pretty much we want to know if we're capitalizing, i .e.
00:37
It's an asset or expensing.
00:51
So a couple ways to know if it's going to be capitalized or expensed in regard to costs for a contract.
01:01
One is that if the contract is less than one year, so if it's less than one year, then it's not capitalized.
01:17
So i'll say cap.
01:19
It's not capitalized.
01:21
So that relates to question to problem or selection d where it talks about recognized as an asset if they relate to the performance obligation, which has been satisfied.
01:33
So if it's been satisfied, if it's already complete, maybe it's less than a year, then we don't capitalize it.
01:40
So it's not d.
01:48
C talks about that we expense when incurred.
02:03
That's option c, and that is also not correct because costs are expensed only if they aren't directly relating to a contract or aren't recoverable.
02:24
So aren't recoverable would be like wasted materials...