Question

 Which of the following is a performance obligation? 

• Nokia Electronics promises to make repairs if a product will become defective within a week of purchase. 

• Acacia Flowers provides assurance that its flowers will stay fresh for two days. 

• Lil Pharma receives a donation in return for settling a liability owed to a municipality. 

• Seve Electronics assurance at an affordable price that provides additional protection after the customer takes possession of the product 

• Fancier Phones provides assurance that is phones will work after purchase. 

Answer 1

A performance obligation is a promise in the contract with the customer to deliver:-

• A product or service which is distinct; Or
• A series of products or services which are same in nature.

According to above, the correct solution is part (a) i.e. Nokia Electronics promises to make repairs if a product will become defective within a week of purchase.