The Transaction Price Should Be Allocated to the Contract's Performance

question 128

True/False

The transaction price should be allocated to the contract's performance obligations in proportion to the stand-alone selling prices of the performance obligations.

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Definitions:

FIFO Method

"First In, First Out," an inventory valuation method where goods that are first added to inventory are the first ones considered sold, used in accounting to calculate cost of goods sold and ending inventory.

Equivalent Units

A concept in cost accounting used to express the amount of materials, labor, and overhead a company has put into production in terms of fully finished units.

First-In, First-Out Method

An inventory valuation method where the cost of the earliest goods purchased is the first to be recognized in determining cost of goods sold.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully equivalent units for the purposes of accounting.