Читать книгу Revenue Recognition - Renee Rampulla - Страница 31

FASB ASC 606 defines a contract as “an agreement between two or more parties that creates enforceable rights and obligations.” Paragraph 1 of FASB ASC 606-10-25 further specifies that a contract(s) with a customer exists only when all of the following criteria have been met:

 The parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices) and are committed to perform their respective obligations.

 The entity can identify each party’s rights regarding the goods or services to be transferred.

 The entity can identify the payment terms for the goods or services to be transferred.

 The contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change as a result of the contract).

 It is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer

Here are some important considerations when assessing whether a contract exists with a customer:

 A contract does not exist if each party to the contract has the unilateral enforceable right to terminate a wholly unperformed contract without compensating the other party or parties.

 When evaluating whether collectability of an amount of consideration is probable, an entity needs to consider only the customer’s ability and intention to pay that amount of consideration when it is due. The amount of consideration to which the entity will be entitled may be less than the price stated in the contract if the consideration is variable because the entity may offer the customer a price concession. Some entities find the collectability criteria difficult to assess because of certain variables, such as contract modifications or non-cash considerations, that could that potentially impact the criteria.