Answer
The allocation is based on the product or service that an entity could offer to the market as a standalone. The revenue standard calls for estimation of the standalone price in situations where the selling price is not available. There are three possible methods of estimating the standalone price, which include:
1. Expected cost plus margin approach.
2. Adjusted Market Assessment approach
3. Residual approach
Work Step by Step
The least preferred approach is the residual approach.
