Halo Company entered into a contract with Ringo Corporation, in which Halo agreed to provide Ringo with building supplies. Ringo agreed to pay a total of $ 27,000 at delivery. Under the contract-based view, Halo's net contract position can be assumed to be
A) $ 27,000.
B) $ 18,000.
C) $ 9,000.
D) $ 0.

Question

Quizplus · Accepted Answer

Under the contract-based view, Halo's net contract position can be assumed to be $0 because the contract has not been fulfilled and there has been no exchange of performance or consideration. Halo has not yet delivered the building supplies and Ringo has not yet paid for them. Therefore, there is no revenue or expense recognized until the contract is fulfilled.

Halo Company Entered into a Contract with Ringo Corporation, in Which