Page 402 - SBR Integrated Workbook STUDENT S18-J19
P. 402
Chapter 25
Example 2
Variable consideration
Gross Net has little experience
Gross Net must estimate the variable consideration it expects to receive. This
might be nil or $0.2 million. However, the estimate cannot be included in the
transaction price because its receipt is not highly probable. Therefore the
transaction price is $1 million. Revenue recognised in the current year will be
$0.5 million ($1m × ½).
Gross Net has extensive experience
The estimated variable consideration that will be received is $0.2 million. This
can be included in the transaction price because its receipt is highly probable.
The transaction price is therefore $1.2 million. Revenue recognised in the
current year will be $0.6 million ($1.2m × ½).
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