The key accounting issue related to bundled (multiple-element)sales transactions is how much of the lump-sum contract price should be recognized up front when the product is delivered to the customer,and how much should be deferred and recognized as the seller satisfies its commitment for other deliverables specified in the contract.

Question

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This statement is true. Bundled sales transactions require the seller to determine the fair value of each deliverable in the contract and allocate the lump-sum contract price accordingly. The portion of the contract price that is allocated to each deliverable will determine the amount that is recognized when each deliverable is delivered to the customer. Any portion of the contract price that cannot be allocated to a specific deliverable must be deferred and recognized over time as the seller satisfies its commitment for other deliverables specified in the contract.

The Key Accounting Issue Related to Bundled (Multiple-Element)sales Transactions Is