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 accounting standard board (FASB). FASB’s purpose is to establish best practices for GAAP accounting professionals and companies who follow these principles. ASC 606 is a recent change in standardized accounting principles for revenue recognition. In a nutshell, Topic 606 covers revenue from contracts with customers and identifies performance and licensing obligations. The document explains, step-by-step, how to account for revenue earned from your business operations.as per the given following optins: (c)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 hence , it is correct option from the given above following options.

Answered: Under the new revenue recognition…

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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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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