Commitments to deliver goods or services are grouped in a revenue contract and are listed as performance obligations. Each performance obligation has a revenue recognition rule that lists the sales order lines, trailer charges, and invoices covered by the performance obligation.

After a revenue contract has been created, the revenue rule listed on the performance obligation is assessed. Depending on the revenue recognition rule specified on the performance obligation, revenue may be recognized immediately or deferred from the sales revenue accounts and posted to the deferred revenue accounts.

The rules linked to the performance obligations specify when the obligations of the contract have been met. You can recognize the revenue only when the performance obligations have been met. An obligation is met when control of the goods or services has been transferred to the customer.