Defining Assets and Liabilities

The Net Contract Asset or Liability per Element journal entry adjusts account balances to present remaining obligations as either contract assets or contract liabilities. The reclassification process reverses any netting entries in the next period. Revenue arrangements with a combination of positive and negative elements are either assets or liabilities.

When the element is a return, the element is treated as an asset or liability per the conditions in the following table:

Positive Billed Amount

Zero Billed Amount

Negative Billed Amount

Positive Recognized Amount

Zero Recognized Amount

Negative Recognized Amount

Positive Recognized Amount

Zero Recognized Amount

Negative Recognized Amount

Positive Recognized Amount

Zero Recognized Amount

Negative Recognized Amount

If the recognized amount – the billed amount > zero, it is an asset.

If the recognized amount – billed amount is < zero, it is a liability.

Liability

Asset

Liability

Neither an asset or a liability

Asset

Liability

Liability

If the recognized amount – billed amount is > zero, it is a liability.

If the recognized amount – billed amount is < zero, it is an asset.

When the element is not a return or all the elements in a reclass group are returns, the element is treated as an asset or liability per the conditions in the following table:

Positive Billed Amount

Zero Billed Amount

Negative Billed Amount

Positive Recognized Amount

Zero Recognized Amount

Negative Recognized Amount

Positive Recognized Amount

Zero Recognized Amount

Negative Recognized Amount

Positive Recognized Amount

Zero Recognized Amount

Negative Recognized Amount

If the recognized amount – the billed amount is > zero, it is an asset.

If the recognized amount – billed amount is < than zero, it is a liability.

Liability

Liability

Asset

Neither an asset or a liability

Liability

Asset

Liability

If the recognized amount – billed amount is > zero, it is a liability.

If the recognized amount – billed amount is < zero, it is an asset.

Related Topics

General Notices