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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?

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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25 WITH WAV 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 additional 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. Multiple Choice Assume Microsoft estimates variable consideration as the most likely amount. How much revenue should Microsoft recognize on this contract in 2024? $27,500 $31,250 $28,325 SEENOO Saved b Prey Help Save & Exit 3 of 25 Next > Submit
Transcribed Image Text:25 WITH WAV 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 additional 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. Multiple Choice Assume Microsoft estimates variable consideration as the most likely amount. How much revenue should Microsoft recognize on this contract in 2024? $27,500 $31,250 $28,325 SEENOO Saved b Prey Help Save & Exit 3 of 25 Next > Submit
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