Question

How do you calculate the Transaction Price?

Ayayai Corp. enters into a contract with a customer to build an apartment building for $930,000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $151,500 to be paid if the building is ready for rental beginning August 1, 2018. The bonus is reduced by $50,500 each week that completion is delayed. Ayayai commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed byProbability August 1, 2018 August 8, 2018 August 15, 2018 After August 15, 2018 70 % 20 5 (a) Determine the transaction price for the contract, assuming Ayayai is only able to estimate whether the building can be completed by August 1, 2018, or not (Ayayai estimates that there is a 70% chance that the building will be completed by August 1, 2018). (If answer is 0, please enter 0. Do not leave any fields blank.) Transaction Price (b) Determine the transa which to develop a reliable estimate of completion by the August 1, 2018, deadline. (If answer is 0, please enter 0. Do not leave any fields blank.,) for the contract, assuming Ayayai has limited information with Transaction Price

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Answer #1

A) Completed By August 1, 2018 August 8, 2018 August 15, 2018 After August 15, 2018 Total Bonus Probability CalculationBonus

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