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What the transaction price for the contract is

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Reference no: EM132804199

Marle Construction enters into a contract with a customer to build a warehouse for P850,000 on March 30, 20x5 with a performance bonus of P50,000 if the building is completed by July 31, 20x5. The bonus is reduced by P10,000 each week that completion is delayed.

Marle commonly includes these completion bonuses in its contracts and, based on prior experience estimates the following completion outcomes:

Completed by Probability
July 31, 20x5 65%
August 7, 20x5 25%
August 14, 20x5 5%
August 21, 20x5 5%

Problem 1: The transaction price for this contract is

a. P895.000
b. P850,000
c. P585,000
d. P552,500

Reference no: EM132804199

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