Contract Combination
Contract Combination
The ASC 606 Standard
The requirement to account for two or more contracts entered into at or near the same time with the same customer as a single contract. This prevents companies from artificially manipulating revenue timing through contract structuring.
The Real-World Scenario
A sales rep breaks a $500,000 enterprise rollout into three separate contracts signed in the same week just to hit specific quarterly quota tiers.
The Spreadsheet Breaking Point
When a sales rep splits a deal to hit quota, disparate invoicing dates cause manual accountants to completely miss the required combination.
The Hidden Cost to the Bottom Line
Treating combined contracts separately manipulates margin and revenue timing, resulting in severe compliance violations and audit penalties.
How GAAPX Eliminates the Risk
Automatically links associated contracts by customer, date, and commercial objective, applying consolidated revenue rules instantly.