Siddhi entered into a contract offering variable consideration on January 1, 2016. The contract paid Siddhi $12,000
Question:
Siddhi entered into a contract offering variable consideration on January 1, 2016. The contract paid Siddhi $12,000 upfront for six months of continuous consulting services. In addition, there was a 60% chance the contract would pay an additional bonus of $4,000 and a 40% chance the contract would pay an additional bonus of $6,000, depending on the outcome of the consulting contract. This contract qualified for revenue recognition over time. After three months, Siddhi changed its assessment and expected the chance to receive $4,000 to be 30% and the chance to receive $6,000 to be 70%. On July 1, 2016 Siddhi received the $6,000 bonus from the client. Explain.
Intermediate Accounting
ISBN: 978-1118742976
16th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield