Chapter 18, Problem 2CE

To determine

Performance obligation: A promise to transfer goods or services is defined as performance obligation. There can be multiple performance obligations when a company promises to transfer individual goods or services or a combination of goods or services.

Contract modification: A contract modification may occur whenever there is any addition, change or cancellation of specific terms and conditions in an existing contract.

To explain: Conditions when a contract modification will be accounted as a separate performance obligation.