Solution 1:
Consideration | Bonus Amount | Probability of Outcome | Revenue Recognized |
Bonus if completed on agreed upon date | $34,800.00 | 55% | $19,140.00 |
Bonus if completed one week late | $26,100.00 | 30% | $7,830.00 |
Bonus if completed two weeks late | $17,400.00 | 15% | $2,610.00 |
Variable consideration | $29,580.00 | ||
Fixed consideration | $161,000.00 | ||
Total transaction price | $190,580.00 |
Solution 2:
Consideration | Bonus Amount | Probability of Outcome | Revenue Recognized |
Bonus if completed on agreed upon date | $34,800.00 | 90% | $31,320.00 |
Bonus if completed one week late | $26,100.00 | 10% | $2,610.00 |
Variable consideration | $33,930.00 | ||
Fixed consideration | $161,000.00 | ||
Total transaction price | $194,930.00 |
Exercise 18-5 Jeff Heun, president of Marigold Always, agrees to construct a concrete cart path at...
Exercise 18-05 Jeff Heun, president of Concrete Always, agrees to construct a concrete cart path at Dakota Golf Club. Concrete Always enters into a contract with Dakota to construct the path for $200,000. In addition, as part of the contract, a performance bonus of $40,000 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-upon date. The performance bonus decreases by $10,000 per week for every week beyond the...
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Jeff Heun, president of Nash Always, agrees to construct a concrete cart path at Dakota Golf Club. Nash Always enters into a contract with Dakota to construct the path for $183,000. In addition, as part of the contract, a performance bonus of $38,800 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-upon date. The performance bonus decreases by $9,700 per week for every week beyond the agreed-upon completion...
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Jeff Heun, president of Pearl Always, agrees to construct a concrete cart path at Dakota Golf Club. Pearl Always enters into a contract with Dakota to construct the path for $215,000. In addition, as part of the contract, a performance bonus of $32,000 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-upon date. The performance bonus decreases by $8,000 per week for every week beyond the agreed-upon completion...
E18.5 (LO 2) (Determine Transaction Price) Jeff Heun, president of Concrete Always, agrees to construct a concrete cart path at Dakota Golf Club. Concrete Always enters into a contract with Dakota to construct the path for $200,000. In addition, as part of the contract, a performance bonus 1 0.00 will be paid based on the timing of completion. The performance bonus will be paid fully if competcu by the agreed-upon date. The performance bonus decreases by $10.000 per week for...
Concrete Company enters into a contract with a customer to build a warehouse for $200,000, with a performance bonus of $40,000 that will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agree-upon date. The performance bonus decreases by $10,000 per week for every week beyond the agreed-upon completion date. Management estimates that there is a 55% probability that he will complete the project on time, a 30% probability that...
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