Ch 5 Assessment Help Save&Exit; Submit 6; Sarjeev enters into a contract offerin

Question

Ch 5 Assessment Help Save&Exit; Submit 6; Sarjeev 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 we pay an additional $2,000 and a 40% chance the contractil pay an addmona $3,000, depending on the outcome of the consulting contract Saryeev concludes that this contr qu… for revenue reco nition over time 2 0 Assume Sanjeev estimates variable consideration as the most likely amount. What is the amount of re.nue Sanjeev would recognize for the first month of the contract? Book Multiple Choice 1,400 $1,333 1,000 O Type here to search /201

Explanation / Answer

There is 60% likelihood of Sanjeev receiving a bonus of Rs. $2000. Hence, this shall be considered while recognizing income.

=(1000*6)+2000

=8000/6

=1333

Correct option is the second one.

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