Answer:
The correct answer is:
C) expected value; expected value
Step-by-step explanation:
Sure, let's break down the explanation for each part of the statement:
1. **Estimating Variable Consideration**:
- Variable consideration refers to the aspect of revenue recognition in accounting where the amount of consideration from a customer can vary due to factors such as discounts, rebates, refunds, or bonuses. Estimating variable consideration is crucial for recognizing revenue accurately, especially in situations where the final amount is uncertain.
2. **Several Possible Outcomes**:
- When there are several possible outcomes for variable consideration, it implies a degree of uncertainty regarding the final amount. In such cases, the most appropriate method for estimating variable consideration would be the expected value method.
3. **Expected Value Method**:
- The expected value method involves calculating the weighted average of all possible outcomes, where each outcome is weighted by its probability of occurring. This approach provides a more comprehensive estimate that takes into account the likelihood of each possible outcome.
4. **Two Possible Outcomes**:
- When there are only two possible outcomes for variable consideration, the situation is relatively simpler compared to scenarios with several outcomes. In this case, the expected value method remains the most appropriate approach for estimating variable consideration.
5. **Consistency in Approach**:
- Using the expected value method for both scenarios ensures consistency in approach and allows for a more robust estimation process. It aligns with the principle of providing the most accurate estimate based on the available information and probabilities.
Therefore, the statement "expected value; expected value" signifies that regardless of the number of possible outcomes, the expected value method is typically the most appropriate choice for estimating variable consideration in revenue recognition.
