Blair Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development. Blair will receive a payment of $$10,000,000$ if the drug receives regulatory approval. Based on prior experience in the drug$-$approval process, Blair determines it is $90\%$ likely that the drug will gain approval and a $10\%$ chance of denial.

Instructions:

Determine the transaction price of the arrangement for Blair Biotech.

Assuming that regulatory approval was granted on December $20,2025,$ and that Blair received the payment from Pang on January $15,2026,$ prepare the journal entries for Blair. The license meetsthe criteria for point$-$in$-$time revenue recognition.