Companies can use the expected value to estimate variable consideration when
A)the contract has only two possible outcomes.
B)a company has a small number of contracts with similar characteristics.
C)a company can use the most likely amount in a range of possible outcomes.
D)a company has a large number of contracts with similar characteristics.

Question

Quizplus · Accepted Answer

The expected value method is appropriate when a company has a large number of contracts with similar characteristics, as it allows for averaging out the variability across many contracts to estimate the variable consideration.

Companies Can Use the Expected Value to Estimate Variable Consideration