Identify Software industry obligations – Combined services

This is an example in a small series for illustrating the concepts in What is a good or service that is distinct?

Scenario C                                            >>>>> See scenario A here, and scenario B here

The vendor’s contract with its customer is the same as in scenario B, except that:… Continue reading

Identify Software industry obligations – Customisation

This is an example in a small series for illustrating the concepts in What is a good or service that is distinct?

Scenario B                                            >>>>> See scenario A here, and scenario C here

The vendor’s contract with its customer is the same as in scenario A, except that as part of the installation service the software is to … Continue reading

Identify Software industry obligations – Distinct service

This is an example in a small series for illustrating the concepts in What is a good or service that is distinct?

Scenario A                                            >>>>> See scenario B here, and scenario C here

A vendor enters into a contract with a customer to supply a license for a standard ‘off the shelf’ software package, install the software, and … Continue reading

Identify Building Construction performance obligations

This is an example in a small series for illustrating the concepts in What is a good or service that is distinct?

A building contractor (the vendor) enters into a contract to build a new office block for a customer. The vendor is responsible for the entire project, including procuring the construction materials, project management and associated services.… Continue reading

What is a good or service that is distinct?

An important item to look at is whether a ‘promise to’ in a contract (established to be a contract for accounting purposes in Step 1) is a distinct good or service, and as a result thereof is a performance obligation.

Example:

Entity XYZ has contractually agreed to build a fence at the home of a customer. From an operational perspective, there are likely three stages to the contract:

  • Purchase the timber, nails, concrete and other required building supplies,
  • Deliver the
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What Does a Performance Obligation Look Like?

Contracts with customers generally state explicitly the goods or services that an entity promises to transfer to a customer. However, promised goods or services in a contract may also be implied by an entity’s customary business practices, published policies, or specific statements if those promises create a reasonable expectation of the customer that the entity will transfer a good or service to the customer. It should be noted that entities are not required to assess whether promised goods or services … Continue reading