Standalone Selling Price Tolerances
Sometimes, the transaction prices of your sold items are not exactly the same as, but are very close to, their standalone selling prices. In this case, your items are sold almost at fair value, and therefore you do not want to perform price allocation on this contract.
The standalone selling price tolerance allows you to specify , instead of a single value, a range of standalone selling prices. The system performs price allocation only when at least one of the items in the contract is sold at a price beyond its specified price range.
The tolerance can be specified either as an amount or as a percentage.
Example
Example 1:
Assume that you have a revenue accounting contract that resembles the following:
Performance Obligation | Transaction Price | Standalone Selling Price (SSP) | SSP Tolerance | SSP Tolerance Percentage | Price Within Specified Range? |
|---|---|---|---|---|---|
POB1 | EUR 18 | EUR 20 | EUR 2 | Not applicable | Yes |
POB2 | EUR 20 | EUR 20 | EUR 2 | Not applicable | Yes |
In this case, price allocation is not performed on the contract.
Example 2:
Assume that you have a revenue accounting contract that resembles the following:
Performance Obligation | Transaction Price | Standalone Selling Price (SSP) | SSP Tolerance | SSP Tolerance Percentage | Price Within Specified Range? |
|---|---|---|---|---|---|
POB1 | EUR 17 | EUR 20 | EUR 2 | Not applicable | No |
POB2 | EUR 20 | EUR 20 | EUR 2 | Not applicable | Yes |
POB3 | EUR 32 | EUR 30 | EUR 3 | Not applicable | Yes |
In this case, the transaction price of POB1 is beyond the range of EUR 18 to EUR 22. Therefore, price allocation is performed on the contract.