BC386 In some contracts, customers are given an option to purchase additional goods or services. The boards considered when those options should be accounted for as a performance obligation. During those discussions, the boards observed that it can be difficult to distinguish between the following:
(a) an option that the customer pays for (often implicitly) as part of an existing contract, which would be a performance obligation to which part of the transaction price is allocated; and
(b) a marketing or promotional offer that the customer did not pay for and, although made at the time of entering into a contract, is not part of the contract and that would not be a performance obligation in that contract.
BC387 Similar difficulties in distinguishing between an option and an offer have arisen in US GAAP for the software industry. Previous US GAAP revenue recognition requirements for the software industry specified that an offer of a discount on future purchases of good
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