enforceable right
(9) Enforceable right. The term enforceable right means any right that a taxpayer has under the terms of a contract or under applicable Federal, state, or international law, including rights to amounts recoverable in equity and liquidated damages. A contract can include, but is not limited to, a statement of work, purchase order, or invoice. (10) Equity method. The term equity method means a method of accounting for financial accounting purposes under which an investment is initially recorded at cost and subsequently increased or decreased in carrying value by the investor's proportionate share of income and losses and such income or losses are reported as separate items on the investor's statement of income. (11) Performance obligation. The term performance obligation means a promise in a contract with a customer to transfer to the customer a distinct good, service, or right; or a series of distinct goods, services, or rights, or a combination thereof, that are substantially the same and that have the same pattern of transfer to the customer. A performance obligation includes a promise to grant or transfer a right to use or access intangible property. Performance obligations in a contract are identified by applying the accounting standards the taxpayer uses to prepare its AFS. Additionally, to the extent the contract with the customer provides the taxpayer with an enforceable right to payment, the revenue from which is not allocated to a performance obligation described in the first two sentences of this paragraph (a)(11) in the taxpayer's AFS but is accounted for as a separate source of revenue in the taxpayer's AFS, such right shall be treated as a separate performance obligation under this section. A fee described in paragraph (j)(2) of this section is an example of an enforceable right that is treated as a separate performance obligation. (12) Prior income inclusion amounts. The term prior income inclusion amounts means amounts of an item of gross income that were required to be included in the taxpayer's gross income under this section or 1.451-8 in prior taxable years. (13) Special method of accounting. The term special method of accounting means a method of accounting expressly permitted or required under any provision of the Code, the regulations in this part, or other guidance published in the Internal Revenue Bulletin (see 601.601(d) of this chapter) under which the time for taking an item of gross income into account in a taxable year is not determined under the all events test in 1.451-1(a). See, however, paragraph (j) of this section relating to certain items of income for debt instruments. The term special method of accounting does not include any method of accounting expressly permitted or required under this section. The following are examples of special methods of accounting to which the AFS income inclusion rule does not apply: (i) The crop method of accounting under sections 61 and 162; (ii) Methods of accounting provided in sections 453 through 460; (iii) Methods of accounting for notional principal contracts under 1.446-3; (iv) Methods of accounting for hedging transactions under 1.446-4; (v) Methods of accounting for REMIC inducement fees under 1.446-6; (vi) Methods of accounting for gain on shares in a money market fund under 1.446-7; (vii) Methods of accounting for certain rental payments under section 467; (viii) The mark-to-market method of accounting under section 475; (ix) Timing rules for income and gain associated with a transaction that is integrated under 1.988-5, and income and gain under the nonfunctional currency contingent payment debt instrument rules in 1.988-6; (x) Except as otherwise provided in paragraph (j) of this section, timing rules for original issue discount (OID) under section 811(b)(3) or 1272 (and the regulations in this part under section 1272 of the Code), income under the contingent payment debt instrument rules in 1.1275-4, income under the variable rate debt instrument rules in 1.1275-5, income and gain associated with a transaction that is integrated under 1.1275-6, and income under the inflation-indexed debt instrument rules in 1.1275-7; (xi) Timing rules for de minimis OID under 1.1273-1(d) and for de minimis market discount (as defined in section 1278(a)(2)(C)); (xii) Timing rules for accrued market discount under sections 1276 and 1278(b); (xiii) Timing rules for short-term obligations under sections 1281 through 1283; (xiv) Timing rules for stripped bonds under section 1286; and (xv) Methods of accounting provided in sections 1502 and 1503 and the regulations thereunder, including the method of accounting relating to intercompany transactions under 1.1502-13. (14) Transaction price amount. The term transaction price amount means the total amount of consideration to which a taxpayer is, or expects to be, entitled from all performance obligations under a contract. The transaction price amount is determined under the standards the taxpayer uses to prepare its AFS.