Sanjeev enters into a contract offering variable consideration. The contract pays him $1,400/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 revenu recognition over time. Assume Sanjeev estimates variable consideration as the expected value. What is che amount of revenue Sanjeev would recognize for the first month of the contract?
Sanjeev enters into a contract offering variable consideration. The contract pays him $1,400/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 revenu recognition over time. Assume Sanjeev estimates variable consideration as the expected value. What is che amount of revenue Sanjeev would recognize for the first month of the contract?
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 $1,400/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 expected value. What is
the amount of revenue Sanjeev would recognize for the first month of the
contract?
$240
$12,480
$1,400
$2,080
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