IDENTIFYING PERFORMANCE OBLIGATIONS NN COMPUTERS MANUFACTURERS AND SELLS COMPUTERS THAT INCLUDE A WARRANTY TO MAKE GOOD ON ANY DEFECT IN ITS COMPUTERS FOR 150 DAYS (OFTEN REFERRED TO AS AN ASSURANCE WARRANTY). IN ADDITION, IT SELLS SEPARATELY, AN EXTENDED WARRANTY, WHICH PROVIDES PROTECTION FROM DEFECTS FOR THREE YEARS BEYOND THE 150 DAYS (OFTEN REFERRED TO AS A SERVICE WARRANTY). IN THIS CASE, TWO PERFORMANCE OBLIGATIONS EXIST, ONE RELATED TO THE SALE OF THE COMPUTER AND THEASSURANCE WARRANTY, AND THE OTHER TO THE EXTENDED WARRANTY (SERVICE WARRANTY). Is this a one performance obligation or a separate performance obligation? How about the extended warranty – one performance obligation or separate performance obligation?
IDENTIFYING PERFORMANCE OBLIGATIONS NN COMPUTERS MANUFACTURERS AND SELLS COMPUTERS THAT INCLUDE A WARRANTY TO MAKE GOOD ON ANY DEFECT IN ITS COMPUTERS FOR 150 DAYS (OFTEN REFERRED TO AS AN ASSURANCE WARRANTY). IN ADDITION, IT SELLS SEPARATELY, AN EXTENDED WARRANTY, WHICH PROVIDES PROTECTION FROM DEFECTS FOR THREE YEARS BEYOND THE 150 DAYS (OFTEN REFERRED TO AS A SERVICE WARRANTY). IN THIS CASE, TWO PERFORMANCE OBLIGATIONS EXIST, ONE RELATED TO THE SALE OF THE COMPUTER AND THEASSURANCE WARRANTY, AND THE OTHER TO THE EXTENDED WARRANTY (SERVICE WARRANTY). Is this a one performance obligation or a separate performance obligation? How about the extended warranty – one performance obligation or separate performance obligation?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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IDENTIFYING PERFORMANCE OBLIGATIONS
NN COMPUTERS MANUFACTURERS AND SELLS COMPUTERS THAT INCLUDE A WARRANTY TO MAKE GOOD ON ANY DEFECT IN ITS COMPUTERS FOR 150 DAYS (OFTEN REFERRED TO AS AN ASSURANCE WARRANTY). IN ADDITION, IT SELLS SEPARATELY, AN EXTENDED WARRANTY, WHICH PROVIDES PROTECTION FROM DEFECTS FOR THREE YEARS BEYOND THE 150 DAYS (OFTEN REFERRED TO AS A SERVICE WARRANTY). IN THIS CASE, TWO PERFORMANCE OBLIGATIONS EXIST, ONE RELATED TO THE SALE OF THE COMPUTER AND THEASSURANCE WARRANTY, AND THE OTHER TO THE EXTENDED WARRANTY (SERVICE WARRANTY).
- Is this a one performance obligation or a separate performance obligation?
- How about the extended warranty – one performance obligation or separate performance obligation?
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