Step 4: Allocate the Transaction Price

The best evidence of a standalone selling price is the price of goods or services sold separately by the Company in similar circumstances and to similar customers; a contractually stated price or a list price for goods or services can be used.

If a standalone selling price is not directly observable, it must be estimated. The following approaches may be used:

1. Adjusted-market-assessment;
2. Expected-cost-plus-margin; or
3. Residual value.