paragraphs B39-B43

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.