C is corrent. One of the three essential characteristics of a liability is that the transaction or event obligating the entity has occurred. The deferred revenue has been received, and thus a liability exists. The subcontractor has not produced the special-order goods as of March 31 so no liability should be recorded for the subcontractor payable.
A is incorrect. One of the three essential characteristics of a liability is that the transaction or event obligating the entity has occurred. The deferred revenue has been received, and thus a liability exists. The subcontractor has not produced the special-order goods as of March 31 so no liability should be recorded for the subcontractor payable.
B is incorrect. One of the three essential characteristics of a liability is that the transaction or event obligating the entity has occurred. The deferred revenue has been received, and thus a liability exists. The subcontractor has not produced the special-order goods as of March 31 so no liability should be recorded for the subcontractor payable.
D is incorrect. One of the three essential characteristics of a liability is that the transaction or event obligating the entity has occurred. The deferred revenue has been received, and thus a liability exists. The subcontractor has not produced the special-order goods as of March 31 so no liability should be recorded for the subcontractor payable.
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