Contract Assets

Contract assets represent amounts a company is entitled to receive for work completed under a contract but has not yet billed the customer or recognized as receivable. They arise when the company has earned revenue through the completion of performance obligations, but billing occurs later. Think of it like a "work done but not yet invoiced" status—it's an asset because the company has a right to payment in the future. Contract assets are important for accurately reflecting a company's performance and financial position, especially in industries like construction or software, where projects span over time.