AASB 15 Revenue from Contracts with Customers 50-54: Estimate variable consideration with the expected value or the most likely amount, choosing the better predictor, applying it consistently, and using all reasonably available information

What does 50-54 require?

Where the promised consideration can vary, through discounts, rebates, refunds, credits, concessions, incentives, bonuses, penalties or a contingency on a future event, the entity estimates the amount it will be entitled to. Consideration is also variable when customary practice, published policies or specific statements give the customer a valid expectation of a price concession, or other facts show the entity intends to offer one. The estimate uses either the probability-weighted expected value, suited to large populations of similar contracts, or the single most likely amount, suited to binary outcomes, whichever better predicts entitlement; one method is applied consistently for a given uncertainty across the contract, using historical, current and forecast information of the kind management uses in pricing, and identifying a reasonable number of possible outcomes.