OHN, Inc., a not-for-profit entity, has been trying to encourage a dentist to move to Challis. In order to attract a dentist to their small town, OHN, Inc. has guaranteed that gross patient revenues will be at least $148,000 each year for their first two years in Challis. This guarantee is intended to assure the prospective dentist that of a solid revenue stream while developing their new practice. The dentist will not be an employee of OHN, Inc. and will be responsible for all of the operating costs of their own clinic.

The controller for OHN, Inc. has contacted your accounting firm for advice on recording the guarantee of revenue. The controller believes it is reasonably possible and possibly probable that the new dentist will generate more than the $148,000 each of the first two years. If they have to pay anything, it will likely be less than $14,800.

How much for the estimated amount should they recognize in the current period?

Answer rating: 100% (QA)

The estimated amount that OHN Inc should recognize ... View the full answer