Question

Which of the following indicators is not considered when determining whether performance obligations are satisfied at a point in​ time? A. The vendor has a present right to payment for the asset. B. The customer is likely to reject delivery of the asset. C. The customer has the significant risks and rewards of ownership of the asset. D. The customer has legal title to the asset.

Answer 1

Answer:

The correct answer is letter "B": The customer is likely to reject delivery of the asset.

Explanation:

In the corporate world, contract performance obligations are those established by two parties one to manufacture or render and deliver goods or services and the other to receive them. That contract can be signed in front of sales, resales, granting rights or constructing or developing an asset.

Facts such as the right to payment for the goods, the client's risk of ownership of the title and the goods themselves can determine if the performance obligations are met or not but the possibility that represents the customer could reject the delivery of the product will not.