Question: Sanjeev enters into a contract offering variable consideration. The contract pays him $1,000/ month for six months of continuous consulting services. In addition, there is
Sanjeev enters into a contract offering variable consideration. The contract pays him $1,000/ month for six months of continuous consulting services. In addition, there is a 60% chance the contract will pay an additional $2,000 and a 40% chance the contract will pay an additional $3,000, depending on the outcome of the consulting contract. Sanjeev concludes that this contract qualifies for revenue recognition over time. Sanjeev estimates variable consideration using the most likely value approach. After Sanjeev has recognized revenue for one month of the contract, he changes his assessment of the chance the contract will pay him $3,000 to 70%. What is the total revenue (month one adj \& month two revenue) that Sanjeev should recognize in month two (round to nearest dollar)
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