Why this is mistaken
Estimate variable consideration with the method that best predicts the amount, then apply the constraint. Preserve the estimate, included amount, constrained- out amount, reversal-risk factors, evidence date, owner, and update control.
Where to watch
When this mistake may appear
- The expected value is $8,000.
- Management thinks the bonus is likely.
Check your work
Your work may contain this mistake if:
- Includes the estimate without reversal-risk evidence.
- Never records the constrained-out amount.
- Fails to update the estimate at the reporting date.