Deloitte
Accounting Research Tool
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Chapter 4 — Step 1: Identify the Contract

4.2 Identifying a Contract With a Customer

4.2 Identifying a Contract With a Customer

An important step in the revenue standard is determining when an agreement with a customer represents a contract for accounting purposes. A contract creates enforceable rights and obligations between two or more parties. Enforceability of the rights and obligations is a matter of law. An agreement does not need to be in writing to constitute a contract. A contract may exist if parties orally agree to an arrangement’s terms. Alternatively, a contract could be implied through customary business practices if those practices create enforceable rights and obligations.