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How to Adjust Identification Contract

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How do you identify performance obligations?

In order to identify performance obligations in each contract, a company needs to determine whether the goods or services are distinct. If distinct, a customer can benefit from the good or service on its own (the good or service is separable from the other goods or services in a contract).

How do you identify a separate performance obligation?

Identify the contract(s) with a customer. Identify the performance obligations in the contract. Determine the transaction price. Allocate the transaction price to the performance obligations in the contract.

What is a separate performance obligation?

A performance obligation is a promise to provide a distinct good or service to a customer. When there are multiple promises in a contract, companies will need to determine whether those goods or services are distinct, and therefore separate performance obligations.

Is installation a separate performance obligation?

Entities should not assume that equipment and installation always represent distinct performance obligations (or should always be combined into a single performance obligation).

What is performance obligation and how is it related to revenue recognition?

Performance obligations are satisfied when control of the good or service has been transferred to the customer. This differs from the current revenue recognition standard, in which the transfer of risks and rewards triggers revenue recognition.

What are performance obligations?

A performance obligation is a promise to provide a distinct good or service to a customer. This is the unit of account for applying the new revenue standard. Goods and services that aren't distinct are bundled together with other goods or services in a contract until a single performance obligation is achieved.

What is a single performance obligation?

A performance obligation is a promise to provide a distinct good or service to a customer. Goods and services that aren't distinct are bundled together with other goods or services in a contract until a single performance obligation is achieved.

What is a performance obligation under what conditions do a performance obligation exist?

A performance obligation exists when an entity provides a distinct product or service. When do we have one combined performance obligation for several performance obligations? — Non-cash consideration (receipt of goods/services. Etc.) — based on the fair value of goods/services received.

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