Excerpt from the Variable Consideration Rule (606-10-32-8 & 606-10-32-9): An entity shall estimate an amount of variable consideration by using either of the following methods, depending on which method the entity expects to better predict the amount of consideration to which it will be entitled: a. The expected value The expected value is the sum of probability-weighted amounts in a range of possible consideration amounts. An expected value may be an appropriate estimate of the amount of variable consideration if an entity has a large number of contracts with similar characteristics. b. The most likely amount The most likely amount is the single most likely amount in a range of possible consideration amounts (that is, the single most likely outcome of the contract). The most likely amount may be an appropriate estimate of the amount of variable consideration if the contract has only two possible outcomes (for example, an entity either achieves a performance bonus or does not). An entity shall apply one method consistently throughout the contract when estimating the effect of an uncertainty on an amount of variable consideration to which the entity will be entitled. In addition, an entity shall consider all the information (historical, current, and forecast) that is reasonably available to the entity and shall identify a reasonable number of possible consideration amounts. The information that an entity uses to estimate the amount of variable consideration typically would be similar to the information that the entitys management uses during the bid-and-proposal process and in establishing prices for promised goods or services. Assignment: YM Construction (YMC) enters into contracts with customers to construct commercial buildings with RUH Construction. The contracts include similar terms and conditions and contain a fixed fee plus variable consideration for a performance bonus related to the timing of YMCs completion of the construction. Based on YMCs historical experience, the expected bonus amounts and associated probabilities for achieving each bonus are as follows: Bonus amount Probability of outcome $ 10% $ 100,000 60% $ 150,000 30% YMC determines that using the expected value method would better predict the amount of consideration to which it will be entitled because it has a large number of contracts that have characteristics that are similar to the new contract. Under the expected value method, what is the estimate that YMC considers to be variable consideration? Estimating the transaction price using the most likely amount method YMC enters into a six-month advertising campaign agreement ($500,000 fixed fee) that also includes a potential $100,000 performance bonus linked to certain goals. YMC estimates it is 80% likely to receive the entire performance bonus and 20% likely to receive none of the bonus. Under the most likely amount method, what is the estimate that YMC consider to be variable consideration?