Concept
Allocating the Transaction Price
Allocate based on relative standalone selling prices. If not directly observable, estimate using adjusted market assessment, expected cost plus margin, or residual approach.
PostedUpModule Details
FARLesson 3 of 4
Allocation & Recognition
Key Point
Over Time vs. Point in Time
Over time if: customer simultaneously receives benefits, entity creates asset with no alternative use + right to payment, or entity enhances customer-controlled asset. Otherwise: point in time when control transfers.
Concept
Measuring Progress
Use input methods (cost-to-cost) or output methods (units delivered, milestones). Cost-to-cost is most common for construction contracts.
Ready to test your knowledge?
Practice questions from this module to reinforce what you learned.