Gupta Industries Received a $300,000 Prepayment from Packard Associates for the Sale

question 307

Multiple Choice

Gupta Industries received a $300,000 prepayment from Packard Associates for the sale of new equipment. Gupta will bill Packard an additional $100,000 upon delivery of the equipment. Upon receipt of the $300,000 prepayment, how much should Gupta recognize for a contract asset, a contract liability, and accounts receivable?

• A) Contract asset: $0; contract liability: $300,000, accounts receivable, $0.
• B) Contract asset: $300,000; contract liability: $0, accounts receivable, $0.
• C) Contract asset: $0; contract liability: $300,000, accounts receivable, $100,000.
• D) Contract asset: $300,000; contract liability: $0, accounts receivable, $100,000.

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Definitions:

Delay The Negative

A strategy to postpone or mitigate adverse outcomes or impacts.

Buffers

Statements or elements in communication that are used to soften the impact of negative news or feedback.

Negative Message

Communication that conveys rejection, denial, or a disappointing outcome.

Bad News Memos

Memos designed to deliver unfavorable news or decisions in a manner that aims to preserve positive relationships and minimize negative reactions.