Performance obligation Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract. The following five indicators confirm the control of goods and service is transferred from the seller to buyer. 1. Obligation to pay the seller, 2. Title of the assets, 3. Ownership of the assets, 4. Risk and rewards of the ownership, and 5. Conformation of the assets transfer. To determine: Whether the seller should recognize revenue (a) over time or (b) when the product or service is completed.

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Chapter 6, Problem 6.5DMP

To determine

Performance obligation

Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract.

The following five indicators confirm the control of goods and service is transferred from the seller to buyer.

1. Obligation to pay the seller,

2. Title of the assets,

3. Ownership of the assets,

4. Risk and rewards of the ownership, and

5. Conformation of the assets transfer.

To determine: Whether the seller should recognize revenue (a) over time or (b) when the product or service is completed.

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