There are many circumstances that can produce variable consideration. Examples include contingencies for events occurring or not occurring (e.g., customer returns), discounts or credits based on sales volume, royalties, and incentives/performance bonuses. You may be accustomed to delaying recognition of variable consideration until it’s received or earned. The new rules, however, require management to estimate variable consideration upfront so that it can be included in the transaction price used to record revenue. This step may result in changes to revenue recognition and the related disclosures—as well as the need for new processes and controls to create accurate estimates and monitor them.