Question
Sanjee enters into a contract offering variable consideration. The contract pays him $1100/month for six months of continuous consulting services. In addition, there is a
Sanjee enters into a contract offering variable consideration. The contract pays him $1100/month for six months of continuous consulting services. In addition, there is a 70% chance the contract will pay an additional $2800 and a 30% chance the contract will pay an additional $1200, depending on the outcome of the consulting contract. Sanjee concludes that this contract qualifies for revenue recognition over time. Assume that Sanjee estimates variable consideration as the most likely amount. After Sanjee has recognized revenue for two months of the contract, he changes his assessment of the chance the contract will pay him $5000 to 50%. What adjustment to revenue should Sanjee recognize to account for that change in estimate?
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