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Annotate Accounting Contract

Annotate Accounting Contract

Aug 6th, 2022

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How to Annotate Accounting Contract

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41 votes

In this session, we explore the concepts of contract asset and contract liability, particularly in relation to long-term projects, often governed by contracts. Typically, these contracts arise in construction or similar projects spanning several years, involving agreements between two parties. To illustrate these concepts, an example is provided involving a non-cancelable agreement to build customized equipment for $500,000 for a customer named Adam Company. This scenario helps clarify how contract assets and liabilities are created within the context of such contractual obligations. The discussion emphasizes the significance of these accounts in financial reporting and project management.

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