Pwc's Cfodirect Podcast

We continue our revenue accounting miniseries with an episode taking a closer look at variable consideration—an essential and sometimes complex element in determining transaction price. From performance bonuses to volume-based rebates, we explore how to estimate and constrain variable amounts as well as when key exceptions apply.In this episode, we discuss:0:58 – Why variable consideration is a critical element of the ASC 606 model7:00 – The general model for estimating variable consideration9:02 – Applying the constraint on the amount of variable consideration18:25 – Common types of arrangements that include variable consideration, such as volume-based rebates and discounts20:59 – Key exceptions to the general model:21:10 – Sales- or usage-based royalty exception26:04 – Variable consideration allocation exception30:24 – Right-to-invoice measure of progress exceptionFor more information, see chapter 4 of our Revenue from contracts with customers guide. You can also listen to the first episode in this series,