Performance Obligations Processing

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Performance Obligations Processing

After the transaction lines are grouped into the revenue contract based on the RC grouping templates, the transaction lines within one revenue contract must be grouped into promises that are made to customers. These promises are referred to as performance obligations (POB) by ASC 606. Revenue can be recognized as or when the performance obligation is satisfied.

In RevPro, performance obligations are defined by POB templates and POB assignment rules. A performance obligation template determines the revenue recognition pattern (trigger and timing) for each distinct performance obligation and might also define cost treatment, variable consideration assignment, and any performance obligation dependencies if applicable.

POB Assignment Order

RevPro identifies the correct performance obligation template to assign to the transaction lines within a revenue contract by attempting all available POB assignment rules in the following order:

  1. Advanced Rule

  2. Assignment - By Attributes

  3. Assignment - By Item/SKU#

If RevPro does not find a rule to assign a performance obligation template, RevPro assigns the Auto POB template by default.

Related Articles

For RevPro to automatically group transaction lines into POBs within a revenue contract, complete the following tasks:

  1. Create POB template. For information, see Create POB Template.

  2. Define POB assignment rules. For information, see Define POB Assignment Rules.

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