Page 178 - F2 Integrated Workbook STUDENT 2019
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Chapter 7
1.5 Step 4: Allocate the transaction price to the performance obligations
In this step, the transaction price (identified in step 3) is now allocated to the relevant
performance obligations (identified in step 2).
The total transaction price should be allocated to each performance obligation in
proportion to standalone selling prices.
Example 7.4
Funkhouser Ltd enters into a contract with a customer that contains two
performance obligations: to sell and install a swimming pool, and to provide
12 months of after sales maintenance services. The contract price is $1 million.
The swimming pool has a stand-alone selling price of $900,000. Similar
separate maintenance service packages are provided by Funkhouser Ltd for
$200,000.
How much of the transaction price should be allocated to each
performance obligation?
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