Is the promised good or service separately identifiable from other promised goods or services within the contract?

To determine whether a good or service is “separately identifiable” it is important to understand what the customer is expecting to receive. Is the reporting entity being engaged to provide separate goods or services, or a combined output. Indicators to consider when making this determination include, but are not limited to, the following:

  • does the reporting entity provide a significant service of integrating the good or service with others in the contract,
  • does the good or service significantly modify or customise another in the contract,
  • is the good or service highly dependent on, or highly interrelated with, others in the contract.

ASC 606-10-25-19(b) and ASC 606-10-25-21

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