Question
A company enters into a contract with a customer to build a warehouse, with a performance bonus of $128,000 if the building is completed by
A company enters into a contract with a customer to build a warehouse, with a performance bonus of $128,000 if the building is completed by October 31, 2021. The bonus is reduced by $20,000 each week that completion is delayed. The company commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:
Completed by Probability
October 31, 2021 70%
November 7, 2021 15%
November 14, 2021 10%
November 21, 2021 5%
The company should recognize $__________ as revenue related to this bonus.
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