Determine the transaction price for this contract

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Question : Brief Exercise

Kingbird Corp. enters into a contract with a customer to build an apartment building for $1,013,300. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $152,100 to be paid if the building is ready for rental beginning August 1, 2018. The bonus is reduced by $50,700 each week that completion is delayed. Kingbird commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:

Completed by Probability

August 1, 2018 70 %

August 8, 2018 20

August 15, 2018 5

After August 15, 2018 5

Determine the transaction price for this contract.

Reference no: EM132368098

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