STEP 2. IDENTIFY SEPARATE PERFORMANCE OBLIGATIONS

Question 1

What is a performance obligation? (def)

Answer 1

A performance obligation is a promise to provide goods or services (or a bundle of goods or services) that are either:

• Distinct
• A series of distinct goods and services that are substantially the same, the performance obligations will be satisfied over time.

Question 2

What is a distinct good or service?

Answer 2

A good or service is distinct when:
- the customer can benefit from the good or service on its own, or with orther readily available resources
- the promise to transfer a good or service is separate from the other promised goods or services in the contract

‘readily available resources’ are those that the customer possess or is able to obtain from the entity or another third party.