Answer: contract asset.

## Explanation Under IFRS 15 (Revenue from Contracts with Customers), when a company performs work on a long-term contract but has not yet billed the customer or received payment, it recognizes a **contract asset**. **Key points:** 1. **Performance obligation progress**: The company has completed 30% of the contract based on costs incurred. 2. **Revenue recognition**: Since it's highly probable that revenue won't be reversed, the company should recognize 30% of the total contract revenue. 3. **Payment terms**: Payment will only be received at the end of the 2-year contract when all performance obligations are met. 4. **Difference between contract asset and receivable**: - **Contract asset**: Represents the company's right to consideration for performance completed but not yet billed (payment is conditional on future performance). - **Receivable**: Represents the company's unconditional right to consideration (typically after invoicing). **Why not the other options:** - **A. Receivable**: Incorrect because the company doesn't have an unconditional right to payment yet. Payment is conditional on completing the entire contract. - **C. Contract liability**: Incorrect because this would represent an obligation to transfer goods or services to a customer for which the company has received consideration (advance payment). Here, no payment has been received. **Conclusion**: The construction company should recognize a contract asset representing its right to consideration for the 30% of work completed but not yet billed or paid for.

Author: LeetQuiz .