Answered: warranty is a separate performance…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter8: Revenue Recognition, Receivables, And Advances From Customers

Section: Chapter Questions

Problem 3Q

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Which of the following about performance obligations is incorrect?

A. Quality-assurance warranty is part of the performance obligation to deliver goods or services that are free of defects, therefore is not separate performance obligation.

B. Construction is an example of multiple performance obligations contract since the associated services are distinct and separately identifiable from the other.

C. An option that has a material right is a separate performance obligation.

D. warranty is a separate performance obligation if the customer has the option to purchase the warranty separately.

E. warranty is a separate performance obligation if the warranty provides a service to the customer beyond quality assurance.

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