Concept
Identifying Performance Obligations
A performance obligation is a promise to transfer a distinct good or service. Distinct means: the customer can benefit from it on its own AND it is separately identifiable.
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FARLesson 2 of 4
Performance Obligations & Transaction Price
Key Point
Variable Consideration Constraint
Variable amounts (bonuses, penalties, discounts) are included only to the extent a significant reversal is not probable. Use expected value or most likely amount method.
Concept
Transaction Price Components
Includes: fixed amounts, variable consideration, significant financing components, non-cash consideration, and consideration payable to the customer.
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