BC266 The boards decided that an entity should generally allocate the transaction price to all performance obligations in proportion to the stand-alone selling prices of the goods or services underlying each of those performance obligations at contract inception (ie on a relative stand-alone selling price basis). They decided that in most cases an allocation based on stand-alone selling prices faithfully depicts the different margins that may apply to promised goods or services.

BC267 Most respondents agreed with the requirement to allocate the transaction price on a relative stand-alone selling price basis. Some of those respondents observed that the requirements were broadly consistent with previous changes to US GAAP for multiple-element arrangements. However, respondents expressed concerns about the following topics:

(a) estimating the stand-alone selling price; and

(b) allocating discounts and contingent consideration.