Vendors may offer customers many related and unrelated products and services sold together (“bundled”) or separately. The prices assigned to the various elements of a particular transaction or series of transactions on the seller's invoices and the timing of issuing those invoices are not always indicative of the actual earning of revenue on the various elements of these transactions. This consensus provides guidance on how to measure consideration received from complex, multi‐element arrangements and how to allocate that consideration between the different deliverables contained in the arrangement.
The guidance in the standard is extensive and complex, due to the complex nature of the underlying revenue transactions. A number of key terms are used in the standard, defined as follows:
Contingent amount The portion of the total consideration to be received by a vendor under a multiple deliverable arrangement that would be realized by the vendor only if specified performance conditions were met or additional deliverables were provided to the customer.
Noncontingent amount The portion of the total consideration to be received by a vendor under a multiple deliverable arrangement that is not subject to any additional performance requirements that the vendor must meet.
Refund rights The legal right of a customer to obtain a concession or recover all or a portion of the consideration paid to a vendor under a multiple deliverable arrangement. ...