Final answer:
The true statement about variable consideration is that a company must constrain revenue recognition when the consideration is uncertain and largely beyond management's control.
Step-by-step explanation:
When it comes to variable consideration in revenue recognition, certain principles must be followed. The statement that most accurately reflects the principles governing variable consideration is: 'A company is constrained from recognizing variable consideration early when the consideration is highly uncertain and largely beyond management's control.'
This statement adheres to the precautionary accounting principle of constraining recognition of revenue. It is important to avoid recognizing revenue too early or in an amount that is not probable; hence, companies must assess the likelihood and magnitude of a reversal in the amount of cumulative revenue recognized.
Regarding the other statements: It is not true that the time value of money may be ignored for long-term contracts; in fact, it should be considered to accurately reflect the present value of future cash flows. The transaction price should not be reduced by an estimated loss from customer credit risk; instead, an allowance for doubtful accounts should be established. Also, noncash consideration cannot be ignored; it has to be measured at fair value, or if not determinable, by the estimated standalone selling price.