When two or more contracts are entered into at or near the same time with the same customer (or related parties of the customer) and combined in accordance with paragraph 606-10-25-9, an entity accounts for those individual contracts as if they were a single contract. Some stakeholders think that the presentation guidance is unclear about whether the contract asset or contract liability position should be determined for (a) the combined contracts as if they were a single contract or (b) each contract separately. This issue would relate to any scenario in which contracts are combined; however, for some, this issue is more pertinent when the contracts that are combined include contracts with related parties of the customer (that is, the combined contracts are not with the same counterparty).

The contract asset or contract liability position is determined for the combined contracts because the guidance states that they are accounted for as if they were one single contract (paragraph 606-10-25-9).

Paragraph BC72 of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), suggests that the objective of combining contacts is to “identify[ing] the contract that is to be accounted for as the unit of account.” In other words, the rights and obligations in the individual contracts are interdependent across the combined contracts and this is best reflected by combining the individual contracts as if they were a single contract. In paragraph BC317, it is acknowledged that the interdependencies of the rights and obligations in a contract are best reflected by accounting and presenting on a net basis the remaining rights and obligations in the statement of financial position.