Question
On January 1, 2024, Yosemite Inc. was contracted to run a marketing campaign for Saguaro's new product. In addition to getting a base fee of
On January 1, 2024, Yosemite Inc. was contracted to run a marketing campaign for Saguaro's new product. In addition to getting a base fee of $207,000 for the 3-year campaign, Yosemite Inc. also may get an additional 10% of the base fee as a bonus if a targeted sales level is reached at the end of three years. Yosemite Inc. currently lacks sufficient information to make an estimate of the likelihood of the expected bonus, with the marketing director indicating that "If you forced me to make an estimate, I'd say we have a 50/50 chance. But don't quote me on that it's really too early to tell." Yosemite Inc. concludes this contract qualifies for revenue recognition over time, and estimates variable consideration using the most likely amount. How much revenue should Yosemite Inc. recognize as of December 31, 2024?
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