Under the new revenue recognition guidance in ASC Topic 606, which of the following statements is true regarding contracts with customer options? In some cases where customers have an option to acquire additional goods or services, an evaluation is required to determine if the option creates an additional performance obligation. An additional performance obligation is created if the customer could obtain the same rights to additional goods or services without entering the contract. An additional performance obligation is created if the option provides the customer a right to purchase the goods or services at the stand-alone selling price for those goods or services. It is generally not considered a performance obligation when a retailer grants a "customer appreciation dividend" to a customer.

In accounting, ASC stands for Accounting Standards Codification as defined by the financial…

Answered: Under the new revenue recognition…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 2C: The first step in the revenue recognition process is determining if a contract is in place between...

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Under the new revenue recognition guidance in ASC Topic 606, which of the following statements is true regarding contracts with customer options?

In some cases where customers have an option to acquire additional goods or services, an evaluation is required to determine if the option creates an additional performance obligation.
An additional performance obligation is created if the customer could obtain the same rights to additional goods or services without entering the contract.
An additional performance obligation is created if the option provides the customer a right to purchase the goods or services at the stand-alone selling price for those goods or services.
It is generally not considered a performance obligation when a retailer grants a "customer appreciation dividend" to a customer.

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