How does Petro Stopping Center allocate the transaction price to performance obligations in a contract?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenue from contracts with customers is recognized when or as the Company satisfies a performance obligation by transferring control of a promised good or service to a customer. The transfer of control of oil, natural gas, natural gas liquids, LNG, petroleum and chemical products, and other items usually coincides with title passing to the customer and the customer taking physical possession. The Company principally satisfies its performance obligations at a point in time; the amounts of revenue recognized relating to performance obligations satisfied over time are not significant.
When, or as, a performance obligation is satisfied, the group recognizes as revenue the amount of the transaction price that is allocated to that performance obligation. The transaction price is the amount of consideration to which the Company expects to be entitled. The transaction price is allocated to the performance obligations in the contract based on standalone selling prices of the goods or services promised.
Contracts for the sale of commodities are typically priced by reference to quoted prices. Revenue from term commodity contracts is recognized based on the contractual pricing provisions for each delivery. Certain of these contracts have pricing terms based on prices at a point in time after delivery has been made. Revenue from such contracts is initially recognized based on relevant prices at the time of delivery and subsequently adjusted as appropriate. All revenue from these contracts, both that recognized at the time of delivery and that from post-delivery price adjustments, is disclosed as revenue from contracts with customers.
Source: Item 23 — RECEIPTS **RECEIPTS (FDD pages 87–131)
What This Means (2025 FDD)
According to Petro Stopping Center's 2025 Franchise Disclosure Document, revenue from contracts is recognized when the company satisfies a performance obligation by transferring control of a promised good or service to a customer. This typically occurs when the title passes to the customer and they take physical possession of the goods. Petro Stopping Center primarily satisfies its obligations at a single point in time, with revenues recognized over time being insignificant.
When a performance obligation is satisfied, Petro Stopping Center recognizes revenue equivalent to the portion of the transaction price allocated to that obligation. The transaction price is the amount the company expects to receive in exchange for the goods or services. This price is allocated to each performance obligation based on the standalone selling prices of the goods or services promised in the contract.
For commodity sales, Petro Stopping Center typically prices contracts by referring to quoted market prices. Revenue from term commodity contracts is recognized based on the contractual pricing provisions for each delivery. Some contracts adjust pricing after delivery based on prices at a specific point in time. Initial revenue recognition is based on relevant prices at the time of delivery, with subsequent adjustments made as necessary. All revenue, including initial recognition and post-delivery adjustments, is reported as revenue from contracts with customers.