Question: Question 1: Why is it important for a reporting entity to identify its contracts with customers and to fully understand the terms of the contracts?

Question 1:

Why is it important for a reporting entity to identify its contracts with customers and to fully understand the terms of the contracts? Identify the five steps that would be followed when recognising revenue from contracts with customers and discuss if the promised amount of consideration on a contract is variable, how shall an entity estimate the total amount to which the entity will be entitled in exchange for transferring the promised goods or services to a customer?

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