9.2 Measuring the Transaction Price. Bookman Co. develops digital accounting systems and provides accounting-related consulting services.

a. On January 1, 2017, Bookman signs a contract with Brock Florists to install a system and provide consulting services over a two-year period ending in late December 2018. The contract calls for an upfront payment of $25,000 a second payment of $10,000 in March 2017, and a third payment of $20,000 in December 2017. What is the transaction price?

b. Use the same information in Part a, but assume that the payment schedule is an upfront payment of $15,000, a second payment of $20,000 one year later, and a third payment of $20,000 two years later; Brock Florists typically borrows at an interest rate of 10%. What is the transaction price?

c. Use the same information in Part a, but assume that the third payment in December 2017 is contingent on Brocks need for the accounting consulting, specically whether Brock Florists successfully completes a planned merger with a small privately owned pottery company. Brock has completed several mergers in the past and the Brocks management believes that the completion of the current merger is probable. The possible outcomes and likelihoods are (1) the merger occurs as planned (80% chance) or (2) the merger fails to occur (20% chance). What is the transaction price?