PRC-1 · Chapter 4 · Question 48 of 100
'Prime Builders' received an advance payment of Rs. 2 million for a large project. 60% of the work will be completed in the next 12 months, and 40% will be completed in the following year. How should this unearned revenue be classified in the statement of financial position?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 1.2m as Current Liability, Rs. 0.8m as Non-Current Liability
Explanation
Unearned revenue expected to be earned within the next 12 months (60% of 2m = 1.2m) is a current liability. The portion expected to be earned beyond 12 months (40% of 2m = 0.8m) is a non-current liability.
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