Performance Obligations
/pərˈfɔːrməns ˌɒblɪˈɡeɪʃənz/
Definitions
- (n.) Specific duties or promises that a party is contractually required to perform under an agreement.
The contract clearly defines the performance obligations of both parties.
- (n.) Distinct goods or services that must be delivered or completed to fulfill a contract under accounting standards.
Each performance obligation must be identified and measured separately for revenue recognition.
Forms
- performance obligation
Related terms
See also
Commentary
In contracts and accounting contexts, 'performance obligations' refer respectively to duties owed under a contract and to separable promised goods or services under accounting rules; attention to context prevents confusion.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.