Revenue Recognition: Account Receivable or Contract Asset?
ASC 606 details how to determine when a retention receivable is an account receivable and when it is a contract asset. The rule states that retention receivables must be included in contract assets until all performance requirements are completed.
The final determination of classification is based on a review of:
- The contract terms
- The contractor’s historical experience of collection
To help you stay in compliance with revenue recognition standards, save this Construction Issue Sheet.