medium · Financial Accounting revenue-recognition

Which of the following scenarios would most likely require the use of the 'expected value' method rather than the 'most likely amount' method for estimating variable consideration?

1. A retailer offers a tiered volume discount based on total annual purchases by a large customer base.
2. A law firm is paid a contingent success fee only if it wins one specific, single court case.
3. A contractor is entitled to a fixed $50,000 completion bonus if a building is finished by a set date.
4. A pharmaceutical company receives a one-time milestone payment only if its new drug candidate receives FDA approval.

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