---
title: Material Right
description: An option provided to a customer to acquire additional goods or services at a discount they would not receive without the original contract. This requ...
sidebar_position: 10
tags: ['asc-606', 'Revenue']
---

# Material Right

## The ASC 606 Standard

An option provided to a customer to acquire additional goods or services at a discount they would not receive without the original contract. This requires a portion of the current transaction price to be deferred.

## The Real-World Scenario

A customer signs a one-year contract that includes a guaranteed option to renew for a second year at an unprecedented 60% discount.

## The Spreadsheet Breaking Point

Remembering to manually defer a portion of today's revenue to account for a discount promised 12 months in the future is highly prone to human memory failure.

## The Hidden Cost to the Bottom Line

Failing to defer revenue for material rights artificially inflates current margins while creating massive, unfunded liabilities for the future.

## How GAAPX Eliminates the Risk

Automatically calculates the exact value of the future discount, defers the appropriate revenue today, and releases it upon renewal.