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An entity might perform shipping and handling activities related to the promise of a good, so an entity might question whether shipping and handling activities are considered performance obligations. If the shipping and handling activities are performed:

 Before the customer obtains control of the good, then they are not a promised service to the customer. Rather, the shipping and handling are activities to fulfill the entity’s promise to transfer the good to the customer.

 After the customer obtains control of the good, then the entity may elect to account for the shipping and handling as activities to fulfill the promise to transfer the good, in accordance with paragraph 18b of FASB ASC 606-10-25. The entity would have to make an accounting policy election and the application of the election would have to be consistently applied to similar types of transactions. Therefore, if the accounting policy election is made, an entity would not evaluate whether shipping and handling activities are promised services to its customers. Keep in mind that if revenue is recognized for the related good before the shipping and handling activities occur, the related costs of those shipping and handling activities will need to be accrued.