Discuss on the recognition criteria of the contract

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Harta Bhd, a property developer, enters into a contract with Jaya Sdn Bhd (JSB) for the sale of building for RM5 million. JSB plans to have its electrical appliance business centre in the building. JSB has little experience in in the electric appliances market. JSB pays a non- refundable deposit of RM250,000 at the inception of the contract, and entered into the longterm financing agreement with Harta for the remaining 95% of the promised consideration. The financing arrangement is provided a non-recourse basis, which means that if JSB defaults, Harta can repossess the building, but cannot seek further compensation from JSB even if the collateral does not cover the full value of the amount owed. Harta's cost for the building is RM3 million. Jaya obtains control of the building at contract inception.

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Problem 1: Discuss on the recognition criteria of the contract.

Reference no: EM132773085

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