The amount of variable consideration that can be recognized is limited to the amount for which it is probable that there won't be a significant reversal of revenue recognized to date when uncertainty resolves in the future.

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This statement is true according to the revenue recognition principle in the International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP) in the United States. Variable consideration, such as discounts, rebates, and refunds, must be estimated and recognized as revenue only when it is probable that a significant reversal of revenue recognized to date will not occur when uncertainty resolves in the future. This requires a careful assessment of the risks and uncertainties involved in the transaction, the reliability of the data used to estimate the amount of variable consideration, and the experience of the entity in similar transactions. A significant reversal of revenue recognized to date can occur if the estimated variable consideration turns out to be inaccurate, the performance obligations are not met, or the customer disputes the amount or timing of payment. Therefore, the amount of variable consideration that can be recognized should be conservative and based on reasonable and supportable assumptions.

The Amount of Variable Consideration That Can Be Recognized Is