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Why if the performance obligation is not highly dependent on, or interrelated with, other promises in...

Why if the performance obligation is not highly dependent on, or interrelated with, other promises in the contract, then each performance obligation should be accounted for separately?

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Answer #1

If the performance obligation is not highly dependent on,or interrelated with other promises in the contract the each performance obligation should be accounted for separately. This is because there can be many revenue arrangements in a company. So if the revenues have multiple performance obligation that is one contract is dependent on the other they are accounted together and a combined report is prepared for these type of contract and if the performance obligation is not highly dependent on the other interrelated promises they should be accounted separately in order to present a true and fair view of the revenues.

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