STEP 4. ALLOCATE TRANSACTION PRICE TO PERFORMANCE OBLICATIONS Flashcards
How is allocated the transaction price to the performance obligations?
Allocation is based on a relative stand-alone selling price determined at contract inception.
An entity shall allocate to the performance obligations in the contract any subsequent changes in the transaction price on the same basis.
What is the stand-alone selling price?
The stand-alone selling price is the price at which an entity would sell a promised good or service separately to a customer.
The best evidence of a stand-alone selling price is the observable price of a good or service when the entity sells that good or service separately in similar circumstances and to similar customers.
How are the discounts allocated?
Discounts shall be allocated proportionally to all performance obligations in the contract except when an entity has observable evidence that the entire discount relates to only one or more, but not all, performance obligations.
