Solution 1:
Consideration | Bonus Amount | Probability of Outcome | Revenue Recognized |
Bonus if completed on agreed upon date | $32,000.00 | 50% | $16,000.00 |
Bonus if completed one week late | $24,000.00 | 30% | $7,200.00 |
Bonus if completed two weeks late | $16,000.00 | 20% | $3,200.00 |
Variable consideration | $26,400.00 | ||
Fixed consideration | $215,000.00 | ||
Total transaction price | $241,400.00 |
Solution 2:
Consideration | Bonus Amount | Probability of Outcome | Revenue Recognized |
Bonus if completed on agreed upon date | $32,000.00 | 84% | $26,880.00 |
Bonus if completed one week late | $24,000.00 | 16% | $3,840.00 |
Variable consideration | $30,720.00 | ||
Fixed consideration | $222,000.00 | ||
Total transaction price | $252,720.00 |
Jeff Heun, president of Pearl Always, agrees to construct a concrete cart path at Dakota Golf Club. Pearl Always enters...
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