Final answer:
An extended warranty is typically treated as a separate performance obligation since it is an additional service paid for by the buyer that extends beyond the standard warranty period. Other options like quality-assurance warranties, customer prepayments, and options for additional purchases do not qualify as separate performance obligations.
Step-by-step explanation:
Among the options provided, an extended warranty is typically treated as a separate performance obligation. While a normal warranty or quality-assurance warranty is included in the initial purchase price as a guarantee to fix or replace the product, an extended warranty goes beyond the standard period and is an additional service that the buyer pays extra for.
Therefore, under accounting and revenue recognition standards, it is treated as a separate transaction. On the other hand, a customer prepayment is not a separate performance obligation but rather an advance payment for the goods or services. An option to purchase additional goods at the normal discount does not constitute a separate performance obligation as it is simply a potential future transaction that the buyer can choose to utilize or not.
Service contracts found in sectors like automobiles and appliances are examples where extended warranties are most prevalent. These service contracts or extended warranties are essentially promises by the seller to provide extra protection against potential defects or problems, beyond what is already covered by the basic warranty, for a specified additional time period.