A performance obligation refers to promised goods or services in a contract. Only when control of the good or service passes is the performance obligation satisfied. You can then recognize the revenue.

A performance obligation can include the delivery of goods on just a single order. However, you can also collect multiple orders onto a single performance obligation. The delivery of all the orders must then be complete before you can recognize the revenue.

Although performance obligations can cover multiple orders, invoices, and pending invoices, a single performance obligation cannot cover multiple revenue recognition contracts.