Page 172 - F2 Integrated Workbook STUDENT 2019

Chapter 7

1.4 Step 3: Determine the transaction price

The transaction price is the consideration that the selling entity will be
entitled to once it has fulfilled the performance obligations in the
contract.

Most customers will pay in cash or on credit in the short term. In these
circumstances, identifying the transaction price is fairly straightforward and will equal
the amount received.

However, the following complications should be considered:

 Variable consideration e.g. selling price includes a performance related bonus

 Financing e.g. credit is offered over the long term (typically for high ticket items
like car sales)

 Non-cash consideration e.g. use share/goods as part of payment

 Consideration payable to customers e.g. farmer pays supermarket for premium
shelf space

164