Does this meet the definition and recognition requirements

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Question - D Ltd a construction company, has placed an order on 1 June 2020 with CLtd to purchase a custom designed earth-moving equipment at a proposed cost of $4 million. A deposit of $400,000 was made on placing the order and the total purchase price will be confirmed at delivery. Manufacture of the custom designed equipment has yet to begin and delivery of the equipment is scheduled for receipt in three months' time.

On 1 June 2020 Durango Ltd recorded the following accounting entry:

Dr Earth-Moving Equipment $4,000,000

Cr Bank $400,000

Cr Accounts Payable $3,600,000

Required - Applying the 2020 Conceptual Framework, does this meet the definition and recognition requirements of an Asset to be recorded in D.'s account in June 2020?

Reference no: EM133073221

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