Using the most-likely-amount approach for measuring variable consideration, determine the transaction price for this contract. E8-5. Significant Financing Component, Delivery before Payment. [Learning Objective 4] Shifty Beaver Transmission Company enters into a contract with a major U.S. auto manufacturer to design and produce four-speed transmissions for small SUVs. Under the terms of the contract, Shifty Beaver will deliver the transmission immediately, but the auto manufacturers will defer payment for four years, the end of the life of the base warranty. The contract price is $3,500,000, and the interest rate incurred on similar financing agreements in the industry is 5%. Required a. Is there a significant financing component in this contract? b. If there is a significant financing component, determine the amount of sales revenue and interest revenue to be recognized by Shifty Beaver