Determine the transaction price of the arrangement

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Reference no: EM131290021

Coronado Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development. Coronado will receive a payment of $7,600,000 if the drug receives regulatory approval. Based on prior experience in the drug-approval process, Coronado determines it is 85% likely that the drug will gain approval and a 15% chance of denial.

1) Determine the transaction price of the arrangement for Coronado Biotech.

2) Assuming that regulatory approval was granted on December 20, 2017, and that Coronado received the payment from Pang on January 15, 2018, prepare the journal entries for Coronado. The license meets the criteria for point-in-time revenue recognition.

Reference no: EM131290021

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