Has the contract been approved and are both parties committed to perform their respective obligations?

Approval of a contract can be written, oral or implied by an entity’s customary business practices.

An entity’s commitment to perform may be evidenced by contractual language such as termination provisions. If each party has the unilateral right to terminate a wholly unperformed contract without compensating the other party then this would preclude an entity from concluding that both parties have a “commitment to perform”.

ASC 606-10-25-1(a)

Powered by BetterDocs