Question
Aggie enters into a contract offering variable consideration. The contract pays him $4,400/month for six months of continuous consulting services. In addition, there is a
Aggie enters into a contract offering variable consideration. The contract pays him $4,400/month for six months of continuous consulting services. In addition, there is a 60% chance the contract will pay an additional $5,400 and a 40% chance the contract will pay an additional $6,400, depending on the outcome of the consulting contract. Aggie concludes that this contract qualifies for revenue recognition over time.
Aggie estimates variable consideration as the most likely amount. After the 6 months of consulting services has ended, Aggie received the bonus for $6,400. What adjustment to Revenue should Aggie recognize to account for this change?
Group of answer choices
Credit of $6,400
Debit of $5,400
Credit of $1,000
Debit of $1,334
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started