Revenue – ifrs 15 handbook

The assessment of whether it is appropriate to use a residual 
approach should be made separately for each good or service
In some contracts, the price of one good or service may be calculated with 
reference to the price of another good or service. For example, in a contract 
containing IP and PCS, the price of PCS may be established as a fixed 
percentage of the stated contract price of the licence fee.
If this is the case and the stand-alone selling price of the IP is determined to 
be highly variable or uncertain, then the entity needs to consider all available 
data and evidence in determining the stand-alone selling price of the PCS, 
rather than assuming that the fixed percentage of the contract price represents 
the stand-alone selling price of the PCS. The entity considers, among other 
evidence, the price charged for actual renewals of PCS and stated renewal rates 
in other contracts with similar customers.
Consideration allocated is unlikely to be zero or close to zero
IFRS 15.BC273
If applying the residual approach under the standard results in no or very little 
consideration being allocated to a good or service, or to a bundle of goods or 
services, then this outcome may not be reasonable unless the contract is only 
partially in the scope of the standard and another standard also applies to the 
contract (see 
Section 6.3
).
If an entity has determined in applying Step 2 of the model that a good or 
service is distinct, then by definition it has value to the customer on a stand-
alone basis. In this case, an entity considers all reasonably available data 
and whether the stand-alone selling price of that good or service should be 
estimated using another method.
4.2 
Allocate the transaction price
IFRS 15.76
At contract inception, the transaction price is generally allocated to each 
performance obligation on the basis of relative stand-alone selling prices. However, 
when specified criteria are met, a discount (see 
4.2.1
) or variable consideration 
(see 
4.2.2
) is allocated to one or more, but not all, of the performance obligations in 
the contract.
IFRS 15.88–89
After initial allocation, changes in the transaction price are allocated to satisfied and 
unsatisfied performance obligations on the same basis as at contract inception, 
subject to certain limited exceptions (see 
Section 4.3
).

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4.2 Allocate the transaction price
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