Question

In 2022, Spencer Realty considered conducting a survey of every home to determine which homes may be put on the market within the next year. This information would be included in their financial statements as a predictor of potential future revenue. The cost of the survey would be $2.6 million, and the results would not differentiate potential business for Spencer Realty compared to other realtor companies. If Spencer Realty decided to not conduct the survey, that decision is likely based on which concep?

A. Historical cost.
B. Cost constraint.
C. Fair value.
D. Full discloser.

Answer 1

a. cost constraint

Step-by-step explanation:

A cost constraint arises when it is excessively expensive to report certain information in the financial statements. When it is too expensive to do so, the applicable accounting frameworks allow a reporting entity to avoid the related reporting