The General Rule Is That the Transaction Price Should Be

question 147

Multiple Choice

The general rule is that the transaction price should be allocated to the performance obligations based on the relative standalone selling prices unless a discount is ________.

• A) not related to all of the contract's performance obligations
• B) related to all of the contract's performance obligations
• C) less than the standalone selling price
• D) not part of the variable consideration

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Definitions:

Stand-Alone Principle

A method in capital budgeting where a project is evaluated based on its own profitability without considering the impact of other projects or financing methods.

Incremental Cash Flows

The additional cash inflows or outflows expected from taking on a new project or investment, essential for assessing its potential profitability.

Evaluation

The process of determining the significance, worth, or condition of something, typically through careful appraisal and study.

Depreciation Tax Shield

The tax savings achieved by a company from the allowance for depreciation expenses, reducing taxable income.