Transaction price
Transaction price is the consideration an entity expects to be entitled to for transferring promised goods or services, excluding amounts collected for third parties. Determine the consideration expected under the contract, including relevant estimates of variable amounts, and allocate it to distinct performance obligations. Recognise the allocated amount when or as each obligation is satisfied. Reassess estimates when circumstances change.
Worked example
A 1,000 price less an expected 50 rebate gives an estimated transaction price of 950, subject to applicable constraints.
Common mistake
Variable consideration and significant financing terms require judgement; sales tax collected for a government is excluded.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | FR | Direct | Official assessment-window verification pending |
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | K1 | Supporting | July 2027–August 2028 |
| ACCA | SBR | Direct | Official assessment-window verification pending |
| ACCA | SBR | Direct | September 2026–June 2027 |
| CIMA | F2 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |