How should minimum guarantees in a sales-and-usage-based contract be accounted for?

The revenue standards do not prescribe a method for recognizing minimum guarantees (MGs). However, the Transition Resources Group (TRG) has issued guidance in TRG Agenda Reference # 58. That guidance sets forth three acceptable approaches to recognizing MGs: 1) ratably over the contract period; 2) as sales-and-usage occurs; or 3) estimate the total transaction price and determine an appropriate measurement of progress, subject to the sales-and-usage based constraint.

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