Revenue – ifrs 15 handbook

Performance 
obligation
Stand-alone 
selling prices
Selling 
price ratio
Price 
allocation Calculation
Phone
40
42%
32 (75 × 42%)
Internet
55
58%
43 (75 × 58%)
Total
95
100%
75
C recognises revenue of 32 for phone, 43 for internet and 45 for television 
services.

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4 Step 4 – Allocate the transaction price to the performance obligations in the contract | 105
4.2 Allocate the transaction price
| 
Example 5 – Allocating a discount: Bundle discount allocated to all 
performance obligations in a contract
IFRS 15.82
Telco B offers phone, internet and television services to residential customers at 
20, 30 and 40 per month, respectively. If a customer contracts for either phone 
and internet or internet and television services, then B gives a discount of 5. If 
the customer takes all three services, then B gives a discount of 10. Because 
the discount attributable to each bundle is not the same and the analysis of the 
services in each bundle does not provide observable evidence that the discount 
relates to just one or two services, the discount of 10 is allocated to all three 
services as shown below.
Performance 
obligation
Stand-alone 
selling prices
Allocation of 
discount
Price allocation
Phone
20
10 × 20 / 90
18
Internet
30
10 × 30 / 90
27
Television
40
10 × 40 / 90
35
4.2.2 
Allocating variable consideration
IFRS 15.84
Variable consideration (see 
Section 3.1
) may be attributable to:
– all of the performance obligations in a contract;
– one or more, but not all, of the performance obligations in a contract: e.g. a bonus 
that is contingent on transferring a promised good or service within a specified 
time period; or
– one or more, but not all, of the distinct goods or services promised in a series of 
distinct goods or services that form part of a single performance obligation: e.g. 
an annual increase in the price of cleaning services linked to an inflation index 
within a facilities management contract.
IFRS 15.85
An entity allocates a variable amount – and subsequent changes to that amount – 
entirely to a performance obligation, or to a distinct good or service that forms part 
of a single performance obligation, only if both of the following criteria are met:
– the variable payment terms relate specifically to the entity’s efforts to satisfy the 
performance obligation or transfer the distinct good or service (or to a specific 
outcome of satisfying the performance obligation or transferring the distinct good 
or service); and
– allocating the variable amount of consideration entirely to the performance 
obligation or distinct good or service is consistent with the standard’s overall 
allocation principle when considering all of the performance obligations and 
payment terms in the contract.
Judgement is required based on careful consideration of all facts and circumstances 
to determine whether a variable payment relates directly to a specific performance 
obligation, especially when variation in the price is not directly linked to a change in 
effort – e.g. if pricing in the contract is based on a market price or an index.

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106 | Revenue – IFRS 15 handbook
If a contract contains different types of variable consideration, then an entity applies 
the requirements in the standard separately to each type.
IFRS 15.BC285
In some cases, a contract that contains a series of distinct goods or services (see 
Section 2.3
) may contain both fixed and variable consideration. In these cases, 
variable consideration may be attributed to one or more, but not all, distinct goods 
or services promised in the series. This allows an entity, in some cases, to attribute 
the reassessment of variable consideration to only the satisfied portion of a 
performance obligation if that performance obligation is a series of distinct goods or 
services. For an illustration, see 
Example 8
 in this chapter.