Variable Consideration

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Variable consideration is the part of a customer contract price that can change with an uncertain outcome, such as a rebate, refund, bonus or penalty.

Example

A contractor is promised 20,000 plus a 2,000 bonus for early completion. The bonus is variable consideration. Its inclusion depends on the estimate and the risk of a significant revenue reversal.

Remember the difference

IFRS 15 limits the estimate included in revenue. A possible bonus can influence commercial planning even when the seller excludes it from the transaction price.

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Published 9 November 2026. Prepared with AI assistance. Examples are fictional and simplified for learning.

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Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.

Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.

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