Variable consideration is defined broadly and can take many forms, such as price concessions, rebates or refunds. Consideration is also considered variable if the amount an entity will receive is contingent on a future event occurring or not occurring, even though the amount itself is fixed.Click to see full answer. Also to know is, what is variable consideration ifrs15?Under IFRS 15 these amounts are referred to as ‘variable consideration’. At the start of the contract a seller must estimate the amount of consideration to which it expects to be entitled on the contract. This estimate is updated at each reporting date until no further consideration is receivable.One may also ask, what is fixed consideration? Fixed Consideration means the aggregate sum (a) the Cash Consideration, and (b) the Stock Consideration. Fixed Consideration means the fixed consideration payable for the Shares pursuant to sub-clause 3.1 (Fixed Consolidation); Accordingly, how do you account for variable consideration? Variable consideration includes discounts, credits, rebates, performance bonus, penalties, sales returns, refunds, price concessions, incentives, etc. The transaction price includes such variable considerations, whether explicitly stated in the contract or implicitly stated.What is constrained revenue?It allows a company to recognize estimated variable consideration as revenue subject to a “constraint” rule, which stipulates that the estimated amount must be adjusted downward to exclude any amount for which it is “probable” (U.S. GAAP) or “highly probable” (IFRS) that a significant reversal will occur.
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