Question

Aztec Company contracted with the Kirk Company to review their revenue recogniton policies for recording sales. The contract will pay Aztec $600,000 in the torm of a fxed fee. Aztec will also receive $150,000 additionally if Kirk achieves $200,000 in additional revenues. Aztec estimates a 65% chance that K k Company il achieve S200,0 0 in additional revenues Re er to Aztec Company. As su e Aztec estimates at the ransaction ne s the most like y value. The ansac on ce s ○ A. S390.000 OB. $750,000 O C. $697,500 O D. S600,000

Answer 1

Solution:

B.) $750,000 is correct Answer

Transaction price =Fixed fee + Additional commission
Fixed fee	$600,000
Additional commission	$150,000
Transaction price	$750,000