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1) Can an embedded feature be in a separate contract?

Yes. If the separate contract is referenced to and is dependent on another agreement or instrument, and has no substantive or economic value without the existence of the other contract that it references, then the separate contract is in fact merely a provision of the other contract. It could just as easily have been included in the other contract as a provision with no change in the substance of its terms.

2) Can two freestanding instruments exist within a single contract?

Yes. This is effectively the opposite of question 1) above. If contractual terms within a single agreement can survive each other’s termination or expiration, then the contractual terms could have been written as two separate freestanding agreements. The fact that they are included in a single agreement is immaterial. For accounting purposes, the contractual terms should therefore be analyzed as though they were two separate agreements.

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