Practice prompt · Q:revenue-from-contracts-with-customers/allocation-basis-001

Select the basis for allocating transaction price

Tests the conceptual basis for allocating a transaction price among performance obligations.

Updated Sep 8, 2026 Review due Dec 8, 2026

Practice

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A customer contract contains more than one performance obligation. Which basis does Topic 606 generally use to allocate the transaction price?

Choose the best answer. a Relative standalone selling prices, unless the criteria support assigning a discount or variable amount to a specific obligation. b The prices printed beside each item in the customer contract. c The order in which the company expects to satisfy the obligations. d An equal amount for every performance obligation.

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Answer: a

Choice a. Use relative standalone selling prices unless the criteria support assigning a discount or variable amount to a specific obligation.