Revenue – ifrs 15 handbook

Goods and services
Contract prices
Medical imaging device
505,000
One year of PCS
50,000
Training
9,900
Total
564,900
MDC has established a narrow range of stand-alone selling prices for each of 
the goods and service identified as separate performance obligations.
Performance obligation
Range of stand-alone 
selling prices
Medical imaging device
500,000–525,000
One year of PCS
50,000–52,500
Training
960–990 per day
Because all of the stated contract prices fall within narrow ranges, the stated 
contract price may be used to allocate the transaction price to the performance 
obligations. No further allocation is required.
Additional calculations are necessary if the stand-alone selling 
price of one or more performance obligations differs from its 
stated contract price
If the stated contract price for any of the performance obligations in the 
arrangement is not an appropriate estimate of stand-alone selling price, then it 
will be necessary for the entity to perform a relative selling price allocation of the 
transaction price.
This will be the case if, for example, the stated contract price falls outside the 
narrow range of stand-alone selling prices established for that performance 
obligation. When this is the case, an entity should apply a consistent policy to 
determine which price in the range of stand-alone selling prices should be used 
as the stand-alone selling price.
For example, an entity may consider a policy of using either (1) the midpoint 
of the range or (2) the outer limit of the range nearest to the stated contract 
price for that performance obligation. The appropriateness of the policy will be 
determined by whether the resulting allocation of the transaction price would 
meet the allocation objective. 

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4 Step 4 – Allocate the transaction price to the performance obligations in the contract | 101
4.2 Allocate the transaction price
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This can be illustrated by varying the facts in the previous example. For example, 
assume that the total fee for the arrangement is 551,000, with stated contract 
prices of 520,000 for the medical imaging device, 26,000 for the PCS and 5,000 
for the training. Medical Device Company MDC’s policy is to estimate stand-
alone selling prices using the midpoint of its narrow range of observable selling 
prices for performance obligations whose stated contract prices fall outside the 
established ranges when performing the relative selling price allocation.
Because the stated prices for PCS and training fall outside their respective 
estimated selling price ranges, consistent with its policy MDC allocates the 
transaction price using the midpoint of the ranges as follows.