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njeev a co offering variable consideration. The contract pays him $2,600/month for six months of continuous consulting services. In addition, there is a 80% chance the contract will pay an additiona $4,800 and a 20% chance the

njeev a co offering variable consideration. The contract pays him $2,600/month for six months of continuous consulting services. In addition, there is a 80% chance the contract will pay an additiona $4,800 and a 20% chance the

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sanjeev enters into a contract offering variable consideration. The contract pays him $2,600/month for six months of continuous consulting services. In addition, there is a 80% chance the contract will pay an additional $4,800 and a 20% chance the contract will pay an additional $1,200, depending on the outcome of the consulting contract. Sanjeev concludes that this contract qualifies for revenue recognition over time. Assume Sanjeev estimates variable consideration as the most likely amount. What is the amount of revenue Sanjeev would recognize for the first month of the contract? Multiple Choice $3,840 $2,600 $3,400 $3,120
Transcribed Image Text:Sanjeev enters into a contract offering variable consideration. The contract pays him $2,600/month for six months of continuous consulting services. In addition, there is a 80% chance the contract will pay an additional $4,800 and a 20% chance the contract will pay an additional $1,200, depending on the outcome of the consulting contract. Sanjeev concludes that this contract qualifies for revenue recognition over time. Assume Sanjeev estimates variable consideration as the most likely amount. What is the amount of revenue Sanjeev would recognize for the first month of the contract? Multiple Choice $3,840 $2,600 $3,400 $3,120
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