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Discuss the accounting treatment

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Reference no: EM132575052

On 1 December 20X1, Bristow provides a service to a customer for the next 12 months. The consideration is $12 million. Bristow is entitled to an extra $3 million if, after twelve months, the number of mistakes made falls below a certain threshold.

Required: Discuss the accounting treatment of the above in Bristow's financial statements for the year ended 31 December 20X1 if:

(a) Bristow has experience of providing identical services in the past and it is highly probable that the number of mistakes made will fall below the acceptable threshold.

(b) Bristow has no experience of providing this service and is unsure if the number of mistakes made will fall below the threshold.

Reference no: EM132575052

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