Читать книгу Revenue Recognition - Renee Rampulla - Страница 45

1 A contract with a customer exists only when:Each party to the contract has the unilateral enforceable right to terminate a wholly unperformed contract without compensating the other party or parties.The contract lacks commercial substance, so the risk, timing, and the amount of the entity’s future cash flows are expected to change as a result of the contract.It is probable that the entity will collect some of the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customerThe 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.

2 The collectability assessment when assessing whether a contract exists with a customer:Is partly a forward-looking assessment, requiring an entity to use their judgment and consider all of the facts and circumstances, including customary business practices and the entity’s knowledge of the customer.Is based on the customer’s ability and intention to pay the entire amount of promised consideration for the entire duration of the contract.Is determined based on customary business practices that indicate that the seller’s exposure to credit risk is greater than the entire consideration promised in the contract.Allows an entity with the ability to limit their exposure to credit risk by continuing to provide the transferring of additional goods or services to a customer in the event that the customer fails to pay consideration when it is due.