On recognition of contract asset and contract liability in the financial statements
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Date
2023
Journal Title
Journal ISSN
Volume Title
Publisher
Ivane Javakhishvili Tbilisi State University Paata Gugushvili Institute of Economics
Abstract
With the publication of the International Financial Reporting Standard (IFRS) 15 “Revenue from
Contracts with Customers”, approaches to recognition and methods of measurement of the revenues
have changed fundamentally.
The standard considers a contract liability as a reference point for accounting coordinates, for
transferring control over an asset (goods or services) and determining the moment of recognition of
revenue to the seller.
In the fulfillment of the performance obligations in the contract with the customer, assets or liabilities
may arise that are directly related to the performance of the terms of the contract by any of the parties
to the contract.
Depending on the situation in terms of the fulfillment of the obligation by the entity and payment by
the customer, the entity must reflect this contract in the statement of financial condition in the form
of a contract asset or a contract liability
The article discusses the terms of reflection of a contract asset and a contract obligation in the financial
statements, and the difference from such traditional objects of accounting as trade requirements and
trade obligations.
The study of a contract asset or contract obligation is important because it improves general purpose
financial statements, providing financial information to the users of financial statements that will be
useful for making decisions about the supply of resources to a given entity.
The article deals with the opinions and views of various researchers related to this issue.
Description
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Keywords
Citation
Ekonomisti, №4, Volume XIX, 2023, pp. 42-49