A company should only apply the revenue recognition standard to contracts that meet all of the following criteria except
A) the contract has commercial substance.
B) collectability of consideration is probable.
C) each party's rights regarding goods and services to be transferred are identified.
D) the transaction price is fixed and determinable.

Question

Quizplus · Accepted Answer

The revenue recognition standard does not require the transaction price to be fixed and determinable. It allows for estimates and adjustments based on variable consideration, as long as it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

A Company Should Only Apply the Revenue Recognition Standard to Contracts