Worked-example setupScope and assumptions
- Qualifying performance is complete and the customer payment right is unconditional, subject to the stated settlement discount.
- The most-likely-amount method is appropriate. Current evidence supports the full discount at inception and satisfies the variable-consideration constraint.
- Taxes, financing, credit-loss effects, other price changes, and other movements in these accounts are excluded.
- Period
- March sale and settlement under the stated deadlines
- Units
- US dollars
- Rounding
- Whole US dollars; no rounding required
Elm Services is fictional. It completes contracted work on March 15 and bills $1,200. The payment term permits a $24 reduction if cash arrives through March 25. The unreduced amount is due April 14.
Under the supplied estimation and constraint conclusions, Elm initially uses $1,176: $1,200 multiplied by 0.98. The net-settlement formula checks this amount. The customer pays that amount on March 22.
Collection leaves no receivable and creates no new revenue. The discount was already reflected in the supported initial price estimate. Recording another revenue reduction at settlement would count it twice.
The result depends on the supplied facts. History alone does not authorize a net estimate in every contract, and the example excludes credit-loss effects. For a different outcome, follow the expired-discount example. Then complete the independent practice.
Verified calculation · journal entry
The curriculum loader recomputed this example before it entered the site build. Expand any structured input to inspect the stated facts.
- accounts
- 3 fields
Inspect data
{
"cash": {
"classification": "asset",
"opening": 0
},
"receivable": {
"classification": "asset",
"opening": 0
},
"revenue": {
"classification": "revenue",
"opening": 0
}
}- entries
- 2 items
Inspect data
[
{
"label": "March 15 completed service",
"lines": [
{
"account": "receivable",
"credit": null,
"debit": 1176
},
{
"account": "revenue",
"credit": 1176,
"debit": null
}
]
},
{
"label": "March 22 collection",
"lines": [
{
"account": "cash",
"credit": null,
"debit": 1176
},
{
"account": "receivable",
"credit": 1176,
"debit": null
}
]
}
]Recomputed result
| Measure | Value |
|---|---|
| cash | 1,176 |
| ending credit balances | 1,176 |
| ending debit balances | 1,176 |
| receivable | 0 |
| revenue | 1,176 |