Step 5 requires an entity to select a method to measure progress toward completion of a performance obligation satisfied over time. Paragraph 606-10-25-32 states that an entity should apply a single measure of progress for each performance obligation, and paragraph BC161 of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), explains the Board reasoned that utilizing more than one method to measure its performance would effectively bypass the guidance on identifying performance obligations. This is in contrast to existing GAAP in which there is little authoritative guidance related to the attribution in combined units of account or service arrangements and GAAP does not explicitly state that multiple attribution is unacceptable.

The staff thinks that Topic 606 is clear that using multiple methods of measuring progress for the same performance obligation would not be appropriate. For example, utilizing different measures of progress for different nondistinct goods or services in the combined performance obligation or allocating a portion of the transaction price and recognizing revenue for a non-distinct good or service (or allocating fixed consideration to a distinct good or service that forms part of a single performance obligation) would be inappropriate. More specifically, ignoring the unit of account prescribed in Topic 606 and recognizing revenue in a manner that overrides the separation and allocation guidance would not be appropriate.

Based on paragraph BC161, the staff also thinks that a single method of measuring progress should not be broadly interpreted to mean an entity may apply multiple measures of progress so long as all measures employed are either output or input methods. Utilizing different types of input or output methods for different promises in a combined performance obligation would have the result of treating each promise as a separate performance obligation.