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Contract assets A supplier might transfer goods or services to a customer before the customer pays consideration or before payment is due.
In this case the contract is presented as a contract asset (excluding any amounts presented as a receivable).
A contract asset is a supplier’s right to consideration in exchange for goods or services that it has transferred to a customer. A contract asset is reclassified as a receivable when the supplier’s right to consideration becomes unconditional.
Contract liabilities A contract might require payment in advance or allow the supplier a right to an amount of consideration that is unconditional (i.e. a receivable), before it transfers a good or service to the customer. In these cases, the supplier presents the contract as a contract liability when the payment is made or the payment is due (whichever is earlier).
The contract liability is a supplier’s obligation to transfer goods or services to a customer for which it has received consideration (an amount of consideration is due) from the customer.
A person or company might act for another company. In this case the first company is said to be an agent of the second company and the second company is described as the principal.
An entity is a principal if it controls a promised good or service before it is transferred to a customer. However, an entity is not necessarily acting as a principal if it obtains legal title of a product just before legal title is transferred to a customer
In this case the contract is presented as a contract asset (excluding any amounts presented as a receivable).
A contract asset is a supplier’s right to consideration in exchange for goods or services that it has transferred to a customer. A contract asset is reclassified as a receivable when the supplier’s right to consideration becomes unconditional.
Contract liabilities A contract might require payment in advance or allow the supplier a right to an amount of consideration that is unconditional (i.e. a receivable), before it transfers a good or service to the customer. In these cases, the supplier presents the contract as a contract liability when the payment is made or the payment is due (whichever is earlier).
The contract liability is a supplier’s obligation to transfer goods or services to a customer for which it has received consideration (an amount of consideration is due) from the customer.
A person or company might act for another company. In this case the first company is said to be an agent of the second company and the second company is described as the principal.
An entity is a principal if it controls a promised good or service before it is transferred to a customer. However, an entity is not necessarily acting as a principal if it obtains legal title of a product just before legal title is transferred to a customer