medium · Financial Accounting revenue-recognition
A tech company provides a cloud subscription with a base fee of $200,000. The contract includes a variable performance bonus of $50,000 if uptime exceeds 99.9%. Management estimates a 80% probability of achieving this uptime and a 20% probability of failing.
Using the expected value method under ASC 606, what is the transaction price?
- $225,000
- $200,000
- $250,000
- $240,000
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