Identifying the Number of Performance Obligations Required The following separate scenarios a through i describe contracts with performance obligations. Indicate the number of performance obligations in each of the scenarios. a. Nikey Inc. shipped a pair of tennis shoes to a customer with the terms FOB shipping point. The shipping charges are material to the cost of the shoes. However, Nikey Inc. has elected to classify th b. Home Concepts Inc. contracts with a customer to sell and install an underground pool. The pool is operational without any customization or modification. The pool installation could be performer C. Lance Inc. regularly purchases supplies from Vendor Inc. in the amount of $10,000 per month. If Lance Inc. reaches $80,000 of purchases during the calendar year, Vendor Inc. will provide Lance In d. Builders Inc., a contractor, enters into a contract to build an exercise facility for a customer. Builder's Inc. is responsible for the overall management of the project and identifies a number of prom e. Discovery Inc., a technology company, licenses to a customer its patent rights to an electronic process for five years and also promises to manufacture the electronic component for the customer f. Ho Concepts Inc. enters to a contract with a customer to provide one of its popular models of outdoor hot tubs. Th hot tub is widely available and is not customized in any way. However, the g. Appliances Inc. sells a refrigerator (selling price of $1,200) to a customer, who also receives a free trial size packet of a cleaning solution (standalone selling price of $1.50). h. Sun Show Inc. sells sunglasses (selling price of $20) to a customer, who also receives a free trial size packet of a cleaning solution (standalone selling price of $1.50). i. Lance Inc. regularly purchases supplies from Vendor Inc. in the amount of $10,000 per month. If Lance Inc. reaches $80,000 of purchases during the calendar year, Vendor Inc. will lower its selling hipping and handling costs as contract fulfillment costs. y other service providers. a rebate check of 3% on the $80,000 purchases (or $2,400) payable on January 15th of the following year. Hint: Consideration for the current revenue contract depends on a future event-whether or not the purchase thresho d goods and services: engineering, site clearance, foundation, procurement, construction, piping and wiring, installation, and finishing. two years, while the customer develops its own manufacturing capability. The customer expects no significant updates to the electronic process. ustomer has contracted with Home Concepts to order replacement filters every 6 months over the next three years for the maintenance of the hot tub. The filters are not available from other vendors but are sold separately by ce by 10% for Lance's purchases in the following year. The 10% volume discount is not available to customers outside of this promotion. Hint: Consideration for the current revenue contract is not contingent upon or affected k Inc. shipped a pa One performance obligation Concepts Inc. Co Two performance obligations Inc. regularly pur Three performance obligations ers Inc., a contrac Four performance obligations No performance obligations Very Inc., a technd 1. Home Concepts Inc. ent . g. Appliances Inc. sells ar A h. Sun Show Inc. sells sun i. Lance Inc. regularly pure Identifying the Number of Performance Obligations Required The following separate scenarios a through i describe contracts with performance obligations. Indicate the number of performance obligations in each of the scenarios. a. Nikey Inc. shipped a pair of tennis shoes to a customer with the terms FOB shipping point. The shipping charges are material to the cost of the shoes. However, Nikey Inc. has elected to classify th b. Home Concepts Inc. contracts with a customer to sell and install an underground pool. The pool is operational without any customization or modification. The pool installation could be performer C. Lance Inc. regularly purchases supplies from Vendor Inc. in the amount of $10,000 per month. If Lance Inc. reaches $80,000 of purchases during the calendar year, Vendor Inc. will provide Lance In d. Builders Inc., a contractor, enters into a contract to build an exercise facility for a customer. Builder's Inc. is responsible for the overall management of the project and identifies a number of prom e. Discovery Inc., a technology company, licenses to a customer its patent rights to an electronic process for five years and also promises to manufacture the electronic component for the customer f. Ho Concepts Inc. enters to a contract with a customer to provide one of its popular models of outdoor hot tubs. Th hot tub is widely available and is not customized in any way. However, the g. Appliances Inc. sells a refrigerator (selling price of $1,200) to a customer, who also receives a free trial size packet of a cleaning solution (standalone selling price of $1.50). h. Sun Show Inc. sells sunglasses (selling price of $20) to a customer, who also receives a free trial size packet of a cleaning solution (standalone selling price of $1.50). i. Lance Inc. regularly purchases supplies from Vendor Inc. in the amount of $10,000 per month. If Lance Inc. reaches $80,000 of purchases during the calendar year, Vendor Inc. will lower its selling hipping and handling costs as contract fulfillment costs. y other service providers. a rebate check of 3% on the $80,000 purchases (or $2,400) payable on January 15th of the following year. Hint: Consideration for the current revenue contract depends on a future event-whether or not the purchase thresho d goods and services: engineering, site clearance, foundation, procurement, construction, piping and wiring, installation, and finishing. two years, while the customer develops its own manufacturing capability. The customer expects no significant updates to the electronic process. ustomer has contracted with Home Concepts to order replacement filters every 6 months over the next three years for the maintenance of the hot tub. The filters are not available from other vendors but are sold separately by ce by 10% for Lance's purchases in the following year. The 10% volume discount is not available to customers outside of this promotion. Hint: Consideration for the current revenue contract is not contingent upon or affected k Inc. shipped a pa One performance obligation Concepts Inc. Co Two performance obligations Inc. regularly pur Three performance obligations ers Inc., a contrac Four performance obligations No performance obligations Very Inc., a technd 1. Home Concepts Inc. ent . g. Appliances Inc. sells ar A h. Sun Show Inc. sells sun i. Lance Inc. regularly pure