Which of the Following Is Correct About Changes in Estimated

question 206

Multiple Choice

Which of the following is correct about changes in estimated variable consideration?

• A) Changes in estimated variable consideration should be recognized as an adjustment to revenue in the period the change in estimate is made.
• B) Changes in estimated variable consideration should be applied retroactively to all periods affected.
• C) Changes in estimated variable consideration should be allocated retrospectively to all prior periods.
• D) Changes in estimated variable consideration are not recognized in periods after transaction price is first estimated.

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Definitions:

Combined Margin

A financial metric that calculates the total profitability of a product by combining different types of margins, such as gross and net margins.

Investment Opportunity

A financial investment or venture that has the potential to yield returns or profits to the investor.

Company

A business or association of persons engaged in commercial, industrial, or professional activities, either incorporated or unincorporated.

Return on Investment (ROI)

A measure of the profitability of an investment, expressed as a percentage of the initial amount invested.