Allen Corp. enters into a contract with a customer to build an apartment building for $1,031,300....
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Allen Corp. enters into a contract with a customer to build an apartment building for $1,031,300. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $144,300 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $48.100 each week that completion is delayed. Allen commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 1, 2026 Probability 70 % August 8, 2026 20 August 15, 2026 After August 15, 2026 246 (a) Determine the transaction price for the contract, assuming Allen is only able to estimate whether the building can be completed by August 1.2026, or not (Allen estimates that there is a 70% chance that the building will be completed by August 1, 2026). Transaction price 1153474 Allen Corp. enters into a contract with a customer to build an apartment building for $1,031,300. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $144,300 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $48.100 each week that completion is delayed. Allen commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 1, 2026 Probability 70 % August 8, 2026 20 August 15, 2026 After August 15, 2026 246 (a) Determine the transaction price for the contract, assuming Allen is only able to estimate whether the building can be completed by August 1.2026, or not (Allen estimates that there is a 70% chance that the building will be completed by August 1, 2026). Transaction price 1153474
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Related Book For
Intermediate Accounting IFRS
ISBN: 9781119607519
4th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
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