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Under Ind AS 115, an entity presents a CONTRACT LIABILITY in the balance sheet when:
AThe entity has not yet identified the performance obligations in the contract
BThe customer has paid consideration (or payment is due) but the entity has not yet satisfied a performance obligation by transferring a good or service
CThe entity has transferred goods/services but the customer has not yet paid and payment is unconditional
DThe customer has refused to accept the goods or services delivered
Answer & Solution
Correct answer: B. The customer has paid consideration (or payment is due) but the entity has not yet satisfied a performance obligation by transferring a good or service
Para 106 — a contract liability arises when the entity has received consideration (or has an unconditional right to it) ahead of satisfying the PO. The opposite (entity has performed but customer hasn't paid yet) gives rise to either a CONTRACT ASSET (if right to consideration is conditional) or a RECEIVABLE (if unconditional).
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