On 1 January 2016, Producer Enters into a Contract to Deliver

question 13

Multiple Choice

On 1 January 2016, Producer enters into a contract to deliver a product to Customer on 31 March 2016. The contract is non-cancellable and requires Customer to make an advance payment of €5,000 on 1 February 2016. Customer does not pay the consideration until 1 March. How should Producer reflect the transaction in the statement of financial position?

• A) 1 February 2016
• Dr Trade Receivables \(\quad\quad€ 5,000\)
• Cr Contract Liability\(\quad\quad€ 5,000\)
• 31 March 2016
• Dr Contract Liability \(\quad\quad€ 5,000\)
• Cr Revenue\(\quad\quad€ 5,000\)
• B) 1 February 2016
• Dr Trade Receivables \(\quad\quad€ 5,000\)
• Cr Contract Liability\(\quad\quad€ 5,000\)
• 1 March 2016
• Dr Cash \(\quad\quad€ 5,000\)
• \( \mathrm{Cr} \) Trade Receivables\(\quad\quad€ 5,000\)
• 31 March 2016
• Dr Contract Liability \(\quad\quad€ 5,000\)
• Cr Revenue\(\quad\quad€ 5,000\)
• C) 1 January 2016
• Dr Trade Receivables \(\quad\quad€ 5,000\)
• Cr Contract Liability\(\quad\quad€ 5,000\)
• 1 February 2016
• Dr Cash \(\quad\quad€ 5,000\)
• \( \mathrm{Cr} \) Trade Receivables\(\quad\quad€ 5,000\)
• 31 March 2016
• Dr Contract Liability \(\quad\quad€ 5,000\)
• Cr Revenue\(\quad\quad€ 5,000\)
• D) None of the above

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