In an educational context:**Determining Contract Distinctiveness**In the business environment, companies often need to assess whether the products or services stipulated in a contract are distinct. This examination is crucial under the following circumstances:- **Implicit vs. Explicit Obligations:** When a performance obligation is implicit rather than explicit.- **Uncertainty in Recognition:** When the timing of revenue recognition for a performance obligation is unclear.- **Lack of Standard Practices:** When there are no customary business practices related to a performance obligation.- **Complex Arrangements:** When a revenue arrangement involves more than one performance obligation.Understanding these distinctions helps ensure accurate financial reporting and compliance with accounting standards.

Solution: When a revenue arrangement involves more than one performance obligation, company need to consider whether products or services within a contract are distinct.Hence last option is correct.

Business

Accounting

Under which of the following circumstances would a company need to consider whether products or services within a contract are distinct? O when a performance obligation is implicit rather than explicit O when timing of revenue recognition for a performance obligation is unclear O when there are no customary business practices related to a performance obligation when a revenue arrangement involves more than one performance obligation

Under which of the following circumstances would a company need to consider whether products or services within a contract are distinct? O when a performance obligation is implicit rather than explicit O when timing of revenue recognition for a performance obligation is unclear O when there are no customary business practices related to a performance obligation when a revenue arrangement involves more than one performance obligation

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

In an educational context:

**Determining Contract Distinctiveness**

In the business environment, companies often need to assess whether the products or services stipulated in a contract are distinct. This examination is crucial under the following circumstances:

- **Implicit vs. Explicit Obligations:** When a performance obligation is implicit rather than explicit.
- **Uncertainty in Recognition:** When the timing of revenue recognition for a performance obligation is unclear.
- **Lack of Standard Practices:** When there are no customary business practices related to a performance obligation.
- **Complex Arrangements:** When a revenue arrangement involves more than one performance obligation.

Understanding these distinctions helps ensure accurate financial reporting and compliance with accounting standards.

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