Question

Unconditional rights to receive consideration because a performance obligation has been satisfied are Entry field with correct answer

A) reported as a contract asset on the balance sheet.
B) reported as a contract liability on the balance sheet.
C) are not reported on the balance sheet.
D) reported as a receivable on the balance sheet.

Answer 1

Unconditional rights to receive consideration after fulfilling a performance obligation are reported as a receivable, which is an asset on the balance sheet.

Step-by-step explanation:

Unconditional rights to receive consideration because a performance obligation has been satisfied are reported as a receivable on the balance sheet. A receivable is an asset representing the amount of funds due to the company for goods delivered or services provided that the customer is contractually obliged to pay. When a company satisfies a performance obligation, it has fulfilled its part of the contract and the right to payment becomes unconditional. Therefore, this right is recorded as an asset in the form of a receivable rather than as a contract asset or a contract liability.