Which factor indicates the contract has commercial substance according to revenue recognition criteria?

A contract is considered to have commercial substance if its execution is expected to result in changes to the cash flows of the parties involved. This means that the anticipated future cash flows are different due to the contract. In essence, when a contract changes the economic position of the parties, it indicates that the transaction has significant economic implications beyond mere legal formalities.

The commercial substance criterion is an important aspect of the revenue recognition principles because it ensures that the reported revenue reflects actual economic outcomes rather than simply the legal structure of a transaction. If the anticipated future cash flows are different, it implies that the contract should affect the timing, amount, or risk of the cash flows, thus meeting the criteria for commercial substance.

In contrast, the duration of the contract, endorsement by all parties, or the requirement for the contract to involve a service does not inherently speak to whether the contract alters the expected cash flows from the transaction. These factors might be relevant in other contexts or provide additional considerations but do not directly indicate whether a contract possesses commercial substance for revenue recognition purposes.