Page 33 - 19. COMPILER QB - INDAS 115

Product Allocated transaction price
Rs.
Product T 40,000 (Rs. 44,000 ÷ Rs. 1,10,000 total stand-alone selling price ×
Rs. 1,00,000)
Product M (Rs. 66,000 ÷ Rs. 1,10,000 total stand-alone selling price ×
60,000 Rs. 1,00,000)

Total 1,00,000

Scenario 3
Before estimating the stand-alone selling price of Product Hope using the residual approach, the entity
determines whether any discount should be allocated to the other performance obligations in the contract.
As in Scenario 2, because the entity regularly sells Products T and M together for Rs. 1,00,000 and Product G

for Rs. 90,000, it has observable evidence that Rs. 1,90,000 should be allocated to those three products and Rs.
10,000 discount should be allocated to the promises to transfer Products T and M in accordance with
paragraph 82 of Ind AS 115.
Using the residual approach, the entity estimates the stand-alone selling price of Product Hope to be Rs.
50,000 as follows:

Product Stand-alone selling price Method
Rs.
Product G 90,000 Directly observable
Products T and M 1,00,000 Directly observable with discount
Product Hope 50,000 Residual approach
Total 2,40,000

The entity observes that the resulting Rs. 50,000 allocated to Product Hope is within the range of its
observable selling prices (Rs. 40,000 to Rs. 65,000).

Scenario 4

The same facts as in Scenario 3 apply to Scenario 4 except the transaction price is Rs. 2,25,000 instead of
Rs. 2,40,000. Consequently, the application of the residual approach would result in a stand-alone selling price
of Rs. 35,000 for Product Hope (Rs. 2,25,000 transaction price less Rs. 1,90,000 allocated to Products G, T
and M).
The entity concludes that Rs. 35,000 would not faithfully depict the amount of consideration to which the
entity expects to be entitled in exchange for satisfying its performance obligation to transfer Product Hope,

because Rs. 35,000 does not approximate the stand- alone selling price of Product Hope, which ranges from
Rs. 40,000 to Rs. 65,000.
Consequently, the entity reviews its observable data, including sales and margin reports, to estimate the
stand-alone selling price of Product Hope using another suitable method. The entity allocates the transaction
price of Rs. 2,25,000 to Products G, T, M and Hope using the relative stand-alone selling prices of those

products in accordance with paragraphs 73–80 of Ind AS 115.

19. 32