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

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