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Sanjeev enters into a contract offering variable consideration. The contract pays him $1,000/month for six...

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Accounting

Sanjeev enters into a contract offering variable consideration. The contract pays him $1,000/month for six months of continuous consulting services. In addition, 40% chance the contract will pay an additional $3,000, depending on the outcome of the consulting contract.

Sanjeev used the most likely amount to determine transaction price. After Sanjeev has recognized revenue for two months of the contract, he changes his assessment of the chance the contract will pay him $3000 up to 70%.

How much revenue would Sanjeev recognize in the third month of the contract?

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