In the equipment sale and installation scenario, what is considered a standalone performance obligation?

A standalone performance obligation is defined as a promise to provide a distinct good or service to a customer that can be sold separately. In the context of the equipment sale and installation scenario, all components—equipment, installation, and training—need to be assessed to determine if they can be sold or provided independently.

When considering equipment, installation, and training, each component serves a unique function that contributes to the overall value offered to the customer. If a customer can purchase the equipment without the installation, the equipment itself represents a standalone performance obligation. Similarly, installation services and training can also be identified as distinct offerings, particularly because customers may have different needs or may choose to engage third-party services for these components.

By identifying all items—equipment, installation, and training—as standalone performance obligations, it reflects the overall promise made to the customer that may encompass multiple distinct services. This aligns with the revenue recognition principle of recognizing revenue when control of a distinct good or service is transferred to the customer, thereby supporting a more comprehensive understanding of the transaction as a whole.