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2. Marle Construction enters into a contract with a customer to build a warehouse for S850,000 on March 30, 2014 with a performance bonus of
2. Marle Construction enters into a contract with a customer to build a warehouse for S850,000 on March 30, 2014 with a performance bonus of S50,000 if the building is completed by July 31, 2014. The bonus is reduced by $10,000 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 July 31, 2014 August 7, 2014 August 14, 2014 August 21, 2014 Probability 65% 25% 5% 5% Based on the weighted probability expected value method, the transaction price for this transaction is $895,000 $850,000 S552,500 $585,000 C
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