A performance obligation is: A. An enforceable promise in a contract with a customer to transfer a good or service to the customer. B. An offer to transfer a good or service to the customer. C. An expectation of a customer for the receipt of a good or service by a vendor. D. A promise in a contract with a customer to transfer a good or service to the customer.

The correct answer is D. A promise in a contract with a customer to transfer a good or service to the customer.

Explanation:

Performance obligations are those that the entity undertakes to carry out in the contract established with a client, performance obligations are related to the deliverables established or agreed upon in a contractual manner.

At the start of the contract, the entity must evaluate the goods or services promised in a contract with a customer and must consider as a performance obligation each commitment to transfer to the customer a good or service (or a group of different goods and services) or a series of different goods or services that are substantially the same and that have the same pattern of transfer to the client.

D. A promise in a contract with a customer to transfer a good or service to the customer.

Explanation: A performance obligation is defined as an enforceable promise in a contract with a customer to transfer a good or service to the customer.

The good or service provided is distinct, in the sense that it is separable or separately identifiable, are substantially the same and have the same pattern of transfer. This is important because in order to identify performance obligations in a contract, firms needs to determine whether or not the goods or services are distinct.

Some examples of goods or services promised in a performance obligation includes sale of goods, resale of goods purchased, grants, constructing, manufacturing, or developing an asset on behalf of a customer etc.

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