Casement Limited entered into a contract to build both a road and a bridge (assume these represent two separate performance obligations). Casement Limited determined at inception that the contract price was €151 million, which included a €140 million fixed price and an estimated €11 million award fee.

Casement Limited has experience of building similar roads and bridges separately and the stand-alone selling price of the road and bridge, based on prior experience, is €140 million and €30 million respectively.

The amount of the award fee is variable depending on how early Casement Limited finishes the project. Casement Limited will receive a base award fee of €10 million if it finishes the project 30 days ahead of schedule. The award fee increases (decreases) by 10% for each day before (after) the 30 days it finishes the project. Casement Limited has experience with similar contracts and uses the most likely amount to estimate the variable consideration associated with the incentive bonus of €10 million. Based upon its prior experience and current estimates, Casement Limited determines that it will finish the project 30 days ahead of schedule and be entitled to the €10 million award fee. Casement Limited uses the expected value method to estimate the additional variable consideration associated with the 10% daily penalty or incentive and determines it will be entitled to a 10% increase or

€1 million. Casement Limited concludes that it is highly probable that a change in estimate would not result in a significant revenue reversal in the future.

Requirement Discuss how Casement Limited should allocate the contract price to the two separate performance obligations.