The residual approach to estimate stand-alone selling prices is often used for goods or services that are sold separately and that have stable prices.

Question

Quizplus · Accepted Answer

The residual approach is typically used when the stand-alone selling prices of goods or services are highly variable or uncertain, not when they are sold separately and have stable prices. It estimates the stand-alone selling price by subtracting the sum of the observable stand-alone selling prices of other goods or services in the contract from the total transaction price.

The Residual Approach to Estimate Stand-Alone Selling Prices Is Often