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Sir I dont even understand anything regard contract combination described on text below. Can you please help sir! Thanks!
Have attached the extract and can you put in layman’s term so that easy to understand
Contract Combination
Combination should be made if the contracts are entered into at or near the same time with the same customer (or related parties of the customer) and at least one of the following criteria are met:
Contracts are negotiated as a package with a single commercial objective;
Amount of consideration to be paid in one contract depends on the price or performance of the other contract; or
Goods or services promised in the contracts (or some goods or services promised in each of the contracts) are a single performance obligation.
If I buy a house with a neighbouring field, it may be a single contract.
Remember the aim of the exam is to explain things in everyday language, so need to examine like a lawyer. Keep it simple. 🙂
Thanks for your reply Sir!
Just clarifying,
1. Single commercial objective means Money.
2. “Single Performance Obligation” means Combo of goods /& services being transfer of control right?
3. Gist of the story is that Combo of Goods & Services is priced as per IFRS 15’s 5 Step Model? Treated kind of like single contract?
Thanks a lot for your help Sir!
Am I right?
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