Answer
A variable consideration refers to a future event that has the potential of influencing a good or service’s price and the balance of the accounts receivable by extension. Sales allowances are granted in cases of mistakes with shipments, low-quality merchandise, delivery-related problems and inefficiencies with fulfilment of orders. When sales allowances are granted, the amount expected from the accounts receivable decreases.
Work Step by Step
A variable consideration refers to a future event that has the potential of influencing a good or service’s price and the balance of the accounts receivable by extension. Sales allowances are granted in cases of mistakes with shipments, low-quality merchandise, delivery-related problems and inefficiencies with fulfilment of orders. When sales allowances are granted, the amount expected from the accounts receivable decreases.
