Revenue Allocation — ASC 606 Steps 3–4

40 multi-element contracts — platform, support, implementation, usage credits, and a partner add-on — allocated by relative standalone selling price and recognized per obligation. Companion to the Revenue Recognition project, which owns the deferred and RPO roll-forwards. Synthetic, seeded data.

$18.4M

Transaction price across 40 contracts — blended bundle discount 15%

$493K

Reassigned to "free" implementation by relative SSP — 14 bundles invoice it at $0

$0.13M

Partner add-on revenue, presented NET (agent)

$0.85M

What gross presentation would have claimed — same profit, 567% more "revenue"

40/40

Contracts where allocations sum to transaction price to the cent

One contract, two views — C-1004, 24-month bundle

Obligation	SSP	Invoice line	Allocated (606)	Alloc / SSP
platform	$600.0K	$590.9K	$550.4K	91.7%
support	$120.0K	$118.2K	$110.1K	91.7%
implementation	$75.0K	$0.0K	$68.8K	91.7%
usage credits	$300.0K	$295.4K	$275.2K	91.7%
Total	$1,095.0K	$1,004.5K	$1,004.5K	91.7%

Sales invoiced implementation at $0 — a concession that looks free on paper. Relative-SSP allocation reassigns transaction price to it anyway, at exactly the contract's overall discount ratio. You can discount an invoice line; you cannot discount the accounting. The pro-rata column is a validation check, not a hope: any obligation whose ratio deviates from the contract's fails the build — a discount parked on one line is the classic manual-workaround error.

Principal vs agent — scored, not vibed

ASC 606-10-55 indicator	This arrangement	Points to
Primary responsibility for fulfillment	Partner delivers and supports the add-on	Agent
Inventory risk before transfer	None — we never hold or commit to capacity	Agent
Pricing discretion	Partner sets list; we pass through at partner's price	Agent

Conclusion: agent — net presentation. The arithmetic proof is check 5: profit is identical to the cent under either presentation ($0.13M), which is precisely why the control-of-the-good indicators — not the invoice total — make the call. Gross would have added $0.72M of pass-through to the revenue line. For a marketplace or reseller business this single judgment swings reported revenue by multiples.

Validation — re-run before every publish

PASS allocated obligations sum to transaction price, all 40 contracts — max gap $0.000000
PASS bundle discount allocates pro-rata (no obligation eats it alone) — max within-contract ratio spread 0.000001
PASS "free implementation": invoiced at $0, allocated revenue anyway — 14 contracts, $493K reassigned to implementation by relative SSP
PASS lifetime recognized revenue = transaction price, every contract — max gap $0.000000
PASS agent call: profit identical gross vs net; only revenue differs — gross would report $0.85M, net reports $0.13M — same $0.13M profit
PASS blended bundle discount within the stated band — 15.0%

SSP bases: platform and support are observable (standalone renewals and attach); implementation is cost-plus-margin; usage credits use an adjusted market assessment — the hierarchy stated, as a policy memo would. Synthetic, seeded (random.seed(606)). Source: github.com/Lumimama/finance/revenue-allocation.