Revenue recognition is the accounting principle governing when and how much revenue can be recorded on the income statement. Under IFRS 15 and ASC 606, variable consideration (rebates, discounts, bonuses) must be estimated at contract inception and reassessed continuously.
The variable consideration challenge
Audit implications
External auditors focus heavily on variable consideration estimation. Live reconciliation between contract terms and transactional data is what the standards are asking for - and producing it operationally is a Contract Performance Management output.
