How should variable consideration be treated sales- or usage- based consideration?

In certain instances, variable consideration may relate to less than all performance obligations in a contract. In addition, the variable consideration may relate to one or more, but less than all distinct performance obligations in a series of distinct performance obligations.

Sales- or usage- based royalties

Variable consideration related to sales- or usage- based consideration should be allocated specifically to that performance obligation . If a performance obligation has been identified that is a sales- or usage- based royalty, but no consideration has been included in the Determine Transaction Price as the sales- or usage- has not occurred or the performance obligation has not been satisfied, then enter an allocated amount of variable consideration of 0 for the performance obligation.

ASC 606-10-32-39 thru ASC 606-10-32-40

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