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      Question

      Which of these is a liability arising from construction

      contracts under percentage-of-completion where billings exceed progress?
      A Contract asset Correct Answer Incorrect Answer
      B Contract liability (unearned revenue) Correct Answer Incorrect Answer
      C Trade receivable Correct Answer Incorrect Answer
      D Provision for expected loss Correct Answer Incorrect Answer

      Solution

      If the amount billed to the customer (billings) exceeds the revenue recognized to date, the entity has received an advance and has a liability to perform, which is a contract liability.

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