Question

look Princ Maried out of 5.00 PF Determining the Transaction Price for a Revenue Contract A contractor enters into a revenue correct with a customer to build customired equipment for $180.000 with a performance bonus of 199.000 that will be paid based on how quickly the equipment is completed. The amount of the performance bonus decreases by 15% of the original bonus per week for every week beyond the agreed upon completion date. The contractor has had experiences with similar contracts and thus has the data to predict the timing of completion of the contract. Therefore, the contractor concludes that the expected value method is the best predictor of revenue. The contractor estimates that there is a comprobability that the contract will be completed by the agreed upon completion date, a 35 probably that it will be completed one week late, and a 5% probability that will be completed two weeks late. Complete the following table in order to determine the transaction price for revenue recognition for the contractor Round each amount in the table to the nearest dolor Corsiden Bass Amount Probability of outcome Bonus Boca Bonsoled on speed upon ON Bon completed are we . Hors i completed two weeks late o 0 Pardcore .. ON 5 0 New Prevo Save Answers

Answer 1

Solution:

Consideration	Bonus Amount	Probability of Outcome	Revenue Recognized
Bonus if completed on agreed upon date	$99,000.00	60%	$59,400.00
Bonus if completed one week late	$84,150.00	35%	$29,453.00
Bonus if completed two weeks late	$69,300.00	5%	$3,465.00
Variable consideration			$92,318.00
Fixed consideration			$180,000.00
Total transaction price			$272,318.00