Question involving Variable Consideration. Ex: Company A sells a product to Company B for $18,000. Based on past experience with the product and the customer, Company A's management identifies that returns are normally either 3% or 8% of the selling price. Generally, the amount that Company A will be entitled to will be either $17,460 ($18,000 × 97%) or $16,560 ($18,000 × 92%). What does this mean? Please explain in more detail.
Question involving Variable Consideration. Ex: Company A sells a product to Company B for $18,000. Based on past experience with the product and the customer, Company A's management identifies that returns are normally either 3% or 8% of the selling price. Generally, the amount that Company A will be entitled to will be either $17,460 ($18,000 × 97%) or $16,560 ($18,000 × 92%). What does this mean? Please explain in more detail.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Question involving Variable Consideration.
Ex: Company A sells a product to Company B for $18,000. Based on past experience with the product and the customer, Company A's management identifies that returns are normally either 3% or 8% of the selling price. Generally, the amount that Company A will be entitled to will be either $17,460 ($18,000 × 97%) or $16,560 ($18,000 × 92%).
What does this mean? Please explain in more detail.
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