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Reporting entities sometimes receive consideration from their customers in advance of performance on a portion of the contract and, on another portion of the contract, perform in advance of receiving consideration. Contract assets and liabilities related to rights and obligations in a contract are interdependent and therefore are recorded net in the statement of financial position.
Question FSP 33-3 addresses whether contract assets and liabilities can be presented net when they arise from different performance conditions.
Question FSP 33-3
Should contract assets and liabilities be presented net even if they arise from different performance obligations in a contract?
PwC response
Yes. We believe a net contract asset or liability should be determined and presented at the contract level, not at the performance obligation level. Refer to Revenue TRG Memo No. 7 and the related meeting minutes in Revenue TRG Memo No. 11 for further discussion of this topic.

Question FSP 33-4 addresses the presentation of contract assets and liabilities when contracts are combined and accounted for as a single contract.
Question FSP 33-4
Should contract assets and liabilities be recorded net in the statement of financial position for contracts that are combined in accordance with the revenue standard? Or should they be presented separately?
PwC response
We believe when contracts are combined and accounted for as a single contract, the presentation guidance should be applied to the combined contract. Contract assets and liabilities should therefore be presented net as either a single contract asset or a contract liability. Refer to Revenue TRG Memo No. 7 and the related meeting minutes in Revenue TRG Memo No. 11 for further discussion of this topic.
Reporting entities should look to other standards on financial statement presentation to conclude if it is appropriate to net contract assets and contract liabilities if they arise from different contracts that are not combined in accordance with the revenue standard.

Question FSP 33-5 addresses how a reporting entity should present balance sheet accounts other than contract assets and contract liabilities that arise from a contract with a customer.
Question FSP 33-5
How should a reporting entity assess whether to present other balance sheet accounts resulting from accounting for contracts with customers on a net basis (other than contract assets and contract liabilities)?
PwC response
The revenue standard only specifically addresses the need to present contract assets and contract liabilities on a net basis. To determine whether it is appropriate to offset other balance sheet accounts (e.g., accounts receivable against refund liabilities), management should assess the general guidance on balance sheet offsetting included in ASC 210-20.

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