Revenue Recognition: Performance Obligations Satisfied at a Point in Time
Performance obligations are recognized either over time or at a specific point in time. The distinction is important because the decision affects when revenue is recognized. Judgment is required to determine which method best measures the progress of the performance obligation.
This rule outlines when performance obligations are deemed to be satisfied at a specific point in time. When the criteria to recognize revenue over time are not met, then revenue should be recognized at the point in time when control is transferred.
To help you stay in compliance with revenue recognition standards, save this Construction Issue Sheet.