medium · Financial Accounting revenue-recognition

Under ASC 606, when should an entity include variable consideration in the transaction price?

1. Only when the cash tied to the variable amount has been received by the entity.
2. At the maximum possible amount the entity could ever receive under the contract terms.
3. Only to the extent it is highly probable that a significant revenue reversal will not occur.
4. Whenever the probability of eventual receipt is estimated to be greater than 50%, a simple majority test.

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