Are the remaining goods or services distinct?

For a good or service to be considered “distinct” the customer must be able to benefit from it on its own or with resources that are readily available, and the good or service must be separately identifiable from other goods or services promised within the contract.

For the customer to be able to benefit from the good or service on its’ own or with resources readily available they must be able to use, consume or sell for greater than scrap value to generate economic benefits. A resource that is readily available are goods or services that are sold separately, either by the entity or by other entities and can also include resources that the entity has already obtained. This criterion will generally be met if the entity regularly sells the good or service on a standalone basis.

To be considered separately identifiable all factors must be considered. Indicators that a promised good or service is not separately identifiable is; a) if the entity provides a significant service of integrating it with others in the contract, b) it modifies or customizes other goods or services in the contract or c) it is highly interrelated or interdependent on others in the contract. Other indicators may exist and should be considered.

ASC 606-10-25-19

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