IFRS 15 distinguishes between contract assets and IFRS 9 Financial Instruments receivables. Which one of the following statements is correct? A contract asset and an IFRS 9 Financial Instruments receivable are both subject to the risk of non-performance, but an IFRS 9 Financial Instruments receivable is also subject to the credit risk. It is important to distinguish between a contract asset and a receivable because it provides financial statement users with relevant information about the risks associated with the entity's rights. A contract asset arises if nothing other than the passage of time is required before payment of the customer's consideration is due. Contract assets must be presented separately from receivables. A contract asset and a receivable are both subject to the risk that the customer will cause a loss for the entity by failing to pay, but a receivable is also subject to the risk of non-performance.
Added by Lourdes R.
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Both a contract asset and an IFRS 9 Financial Instruments receivable are subject to the risk of non-performance. This means that there is a risk that the other party to the contract or financial instrument may not fulfill their obligations, leading to a loss for Show more…
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