On June 1, 2024, Microsoft entered into a 2-year contract to oversee leasing and maintenance for an apartment building. The contract starts on July 1, 2024. Under the terms of the contract, Microsoft will be paid a fixed fee of $55,000 per year and will receive an additiona 20% of the fixed fee at the end of each year provided that building occupancy exceeds 70%. Microsoft estimates a 15% chance it will exceed the occupancy threshold, and concludes the revenue recognition over time is appropriate for this contract Assume Microsoft estimates variable consideration as the most likely amount. How much revenue should Microsoft recognize on this contract in 2024?
On June 1, 2024, Microsoft entered into a 2-year contract to oversee leasing and maintenance for an apartment building. The contract starts on July 1, 2024. Under the terms of the contract, Microsoft will be paid a fixed fee of $55,000 per year and will receive an additiona 20% of the fixed fee at the end of each year provided that building occupancy exceeds 70%. Microsoft estimates a 15% chance it will exceed the occupancy threshold, and concludes the revenue recognition over time is appropriate for this contract Assume Microsoft estimates variable consideration as the most likely amount. How much revenue should Microsoft recognize on this contract in 2024?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 9MC
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