In making the determination of the number of deliverables (obligations) in a revenue arrangement, we can use the following model:
• The obligation is explicitly referred to in the arrangement.
• Seller is required to perform a distinct action for the buyer.
• Seller’s failure to perform an action would result in a contractual penalty for the seller.
• Inclusion or exclusion of an item in the arrangement would cause the transaction price to vary significantly (significantly implies that the total transaction price would vary by greater than or equal to 10%).
In addition to the company’s offerings of products and services, revenue arrangements will frequently contain buyer options to purchase additional products or services. ...