ACCT 110 Lecture Notes - Lecture 4: Santa Barbara City College, The Stars Group, Credit Risk
Document Summary
Transaction price is the amount of consideration that a company expects to receive from a customer in exchange for transferring goods or services. Transaction price is usually stated within the contract. Consideration paid or payable to the customer. These requirements are for companies under ifrs. Aspe has little guidance on measurement, leaving the decisions to professional judgement. Sometimes the transaction price is dependent on future events. Companies must estimate the amount of consideration to determine the amount of revenue to record called variable consideration. A company recognizes variable consideration only if it is reasonably sure it is entitled to that amount: amount of revenue. They have experience with similar contracts and can estimate the cumulative. It is highly probable there will not be a significant reversal of revenue previously recognized expected value: probability-weighted amount in a range of possible consideration amounts. Most likely amount: the single most likely amount in a range of possible consideration outcomes.
