Revenue – ifrs 15 handbook

Adjusted market
assessment
approach
Expected cost
plus a margin
approach
Residual
approach (limited
circumstances)
Subtract the sum of the observable stand-alone selling
prices of other goods or services promised in the
contract from the total transaction price
Forecast the expected costs of satisfying a performance
obligation and then add an appropriate margin for that
good or service
Evaluate the market in which goods or services are sold
and estimate the price that customers in the market
would be willing to pay
IFRS 15.88
After contract inception, an entity does not reallocate the transaction price to reflect 
subsequent changes in stand-alone selling prices. For a discussion of changes in a 
transaction price as a result of a contract modification, see 
Section 8.2
.
Judgement is often required to estimate stand-alone selling price
IFRS 15.BC269
Often, there is not an observable selling price for all of the goods or services in 
a contract with a customer. As a result, significant judgement is often involved 
in estimating a stand-alone selling price. To estimate stand-alone selling prices 
of goods or services that are not typically sold separately, an entity needs to 
develop processes with appropriate internal controls.
Reasonably available information that may be considered in developing these 
processes might include:
– 
reasonably available data points:
e.g. costs incurred to manufacture or 
provide the good or service, profit margins, supporting documentation 
to establish price lists, third party or industry pricing and contractually 
stated prices;

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4 Step 4 – Allocate the transaction price to the performance obligations in the contract | 93
4.1 Determine stand-alone selling prices
| 
– 
market conditions:
e.g. market demand, competition, market constraints, 
awareness of the product and market trends;
– 
entity-specific factors:
e.g. pricing strategies and objectives, market share 
and pricing practices for bundled arrangements; and
– 
information about the customer or class of customer:
e.g. type of customer, 
geography or distribution channels.
The following framework may be a useful tool for estimating and documenting 
the stand-alone selling price and for establishing internal controls over the 
estimation process.