The transaction price should be allocated to the contract's performance obligations in proportion to the stand-alone selling prices of the performance obligations.

Question

Quizplus · Accepted Answer

This statement is true according to the revenue recognition principle of ASC 606, which requires that the transaction price be allocated to the performance obligations based on their standalone selling prices. This is known as the allocation of transaction price or the relative standalone selling price method.

The Transaction Price Should Be Allocated to the Contract's Performance