Question

Ejaaz enters into a contract offering variable consideration. The contract pays him $2000/month for six months...

Ejaaz enters into a contract offering variable consideration. The contract pays him $2000/month for six months of continuous consulting services. In addition, there is a 80% chance the contract will pay an additional $4800 and a 20% chance the contract will pay an additional $1200, depending on the outcome of the consulting contract. Ejaaz concludes that this contract qualifies for revenue recognition over time.

Assume Ejaaz estimates variable consideration as the most likely amount. What is the amount of revenue Ejaaz would recognize for the first month of the contract?

$2400

$2800

$2000

$3840

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