Question: When multiple performance obligations exists in a contract, they should be accounted for as a single performance obligation when the product is distinct within the contract. determination cannot be made.

What is multiple performance obligation?

Contracts may have multiple performance obligations, with those meeting the following two criteria recognizing revenue separately: ... The good or service is distinct within the context of the contract, meaning the good or service is separately identifiable from other promises in the contract.

When a transaction involves multiple performance obligations in a single transaction?

If the contract contains multiple performance obligations, revenue must be recognized in an amount equal to the fair value of each of the separate performance obligations. The transaction price is only allocated to goods and services that are both capable of being distinct and that are separately identifiable.