The transaction price for multiple performance obligations should be allocated based on
A) total transaction price less residual value.
B) forecasted cost of satisfying performance obligation.
C) what the company could sell the goods for on a stand-alone basis.
D) selling price from the company's competitors.

Question

Quizplus · Accepted Answer

The transaction price for multiple performance obligations in a contract should be allocated based on the stand-alone selling price of each distinct good or service in the contract. This approach reflects what the company could sell the goods or services for on a stand-alone basis, ensuring that the transaction price is allocated in a manner that depicts the amount of consideration to which the company expects to be entitled in exchange for transferring the promised goods or services to the customer.

The Transaction Price for Multiple Performance Obligations Should Be Allocated