Question $4\mathrm{.}4$

On $1$ July $20$X$7,$ Msizi Limited entered into a contract to supply $50000$ widgets to a customer. The contract stipulated a selling price of C$6$ per unit and a due date for payment, in full, of $15$ July $207.$

Msizi Limited satisfied its performance obligations on $31$ July $207,$ but at $31$ August $207,($its financial year end$),$ it had not yet received any payments from the customer.

Required:

a$)$ Provide the definitions for the terms 'contract asset', 'receivable' and 'contract liability' and identify the essential difference between each of these terms.

$23$

Chapter $4$

GAAP: Graded Questions

b$)$ List the steps to be followed before revenue may the widget the the information above and provide thy necessary joumals. Assume:

i$)$ the contract is cancellable.

ii$)$ the contract is non$-$cancellable.

Ignore loss allowances