Contract asset
In one sentenceA business's right to consideration for work it has performed for the customer, when that right is conditional on something other than the passage of time, such as completing a stage before invoicing.
Simply put
A contractor completes work every month, but the contract only allows invoicing when a stage is handed over. Revenue is recognized as work is completed, and the completed but uninvoiced part is a contract asset.
When the right becomes unconditional except for time (the invoice has been issued), the amount moves from the contract asset to receivables.
Worked example
A contracting establishment completed work worth 400,000 SAR on a project, and the contract has so far allowed it to invoice only 250,000 SAR.
Revenue recognized by completion400,000 SAR
Invoiced (receivables)250,000 SAR
Contract asset: 400,000 − 250,000150,000 SAR
Don't confuse it with
Accounts receivableA receivable is an unconditional right after the invoice is issued, while a contract asset is a right still conditional on completion or acceptance.