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Standalone selling price, or SSP, is a measurement for each distinct good or service at contract inception. It supplies the weights used to allocate the transaction price. It is separate from the amount printed on an invoice and from the amount charged for the whole bundle.
Begin with observable sales
The best evidence is the price for separate sales in similar circumstances to similar customers. A reviewer should compare the product or service, customer class, geography, currency, volume, sales channel, and date. A list price or a contract line can be evidence, but neither is presumed to be SSP. Read ASC 606-10-32-31 through 32-33 for the contract-inception measurement and evidence hierarchy.
Estimate when direct evidence is absent
Use reasonably available market, entity, and customer information. Maximize observable inputs and apply the method consistently in similar circumstances. Common approaches include:
- Adjusted market assessment: estimate what a customer in the market would pay, including adjusted competitor prices when useful.
- Expected cost plus margin: estimate the costs to satisfy the obligation and add an appropriate margin for that good or service.
- Residual approach: subtract observable SSPs from transaction price only when the remaining good or service has a highly variable or uncertain selling price.
ASC 606-10-32-34 states these approaches and limits the residual approach. Paragraph 32-35 explains when a combination of methods may be needed.
Preserve the evidence trail
Record the population, ranges, outliers, adjustments, date, and reason for the selected method. Then test whether the result supports the allocation objective. The SSP workpaper does not identify performance obligations, determine total consideration, support a discount exception, or decide when revenue is recognized.
Continue to transaction price allocation to use the supported SSPs.
Put the concept to work
Understand this concept
- Explain observable standalone selling price and bounded adjusted-market, expected-cost-plus-margin, and residual estimation approaches.
Analyze this concept
- Estimate and document standalone selling prices from comparable sales, customer classes, geography, cost, margin, variability, and residual-method eligibility.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Performance obligation — Understand
To understand this concept: Required. An SSP is determined for each identified performance obligation.
- Standalone selling price — Understand
To analyze this concept: Required. Evidence selection follows the available estimation approaches.
Lessons
Worked examples and cases
- Allocate and reconcile Linden Peak's device-and-support contract
- Allocate Cedar Trail's contract by relative SSP
- Allocate Granite Harbor's cabinet-and-maintenance contract
Show 2 more examples and cases
Practice
Common mistaken ideas
Sources
Related concepts
Show 1 more related concepts
Use this idea next
- Lease and nonlease components — Apply
Required level here: analyze. Helpful. Relative standalone prices support component allocation.
- Standalone selling price — Analyze
Required level here: understand. Required. Evidence selection follows the available estimation approaches.
- Transaction price allocation — Understand
Required level here: understand. Required. Relative allocation uses each obligation's SSP.
Used in these readings
These chapters explain or apply this concept. The label states how the chapter uses it.
- ACC 300: Apply the revenue model Use now