If an entity’s contract with a customer includes a material right in the form of a customer option for additional goods or services, the entity should evaluate whether there is a significant financing component as a result of the option in accordance with ASC 606-10-32-17 and 32-18. A significant financing component would not exist if, for example, the timing of transfer of additional goods or services is at the customer’s discretion. In some circumstances, the practical expedient in ASC 606-10-32-18 may be available.
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