respond to: Step two within the five$-$step revenue recognition model is the identification of the performance obligations in the contract. A performance obligation simply promises to provide goods or services $($Revsine et al$.,2021).$ There is a bit of complexity$/$judgment that must be used in order to determine if a single performance obligation applies or if multiple will apply. A separate performance obligation is considered to be distinct, meaning that it must be beneficial to the customer to have them separate and must be defined separately from other promises in a contract $($Revsine et al$.,2021).$

In simple terms, an example of a single performance obligation would be between a new home builder and the homeowner. The home is being built specifically for this homebuyer. This could be a distinct bundle if the homebuyer and contractor are working together to help build the design of the buyer, as the goods or services are highly interdependent or interrelated $($Revsine et al$.,2021).$ An example of a multiple$-$performance obligation would be the purchase of a motorcycle and then purchasing the extended service plan, which is essentially a warranty and not a scheduled maintenance plan. The warranty can be purchased the same day as the motorcycle, but it is separate and can even be bought afterward. It is this way because it can be purchased separately, and it goes beyond the required assurance by the manufacturer to ensure that it is free of defects $($Revsine et al$.,2021).$ Working within the finance department for a dealership, the customer does have to sign a separate contract to get the extended service plan, but it can be purchased by itself or combined into the financing of the motorcycle.