Answered step by step
Verified Expert Solution
Link Copied!

Question

...
1 Approved Answer

Can anyone help me? Teal Corp. enters into a contract with a customer to build an apartment building for $963,500. The customer hopes to rent

Can anyone help me?

Teal Corp. enters into a contract with a customer to build an apartment building for $963,500. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $164,100 to be paid if the building is ready for rental beginning August 1, 2018. The bonus is reduced by $54,700 each week that completion is delayed. Teal commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:
Completed by Probability
August 1, 2018 70 %
August 8, 2018 20
August 15, 2018 6
After August 15, 2018 4
(a)Determine the transaction price for the contract, assuming Teal is only able to estimate whether the building can be completed by August 1, 2018, or not (Teal estimates that there is a 70% chance that the building will be completed by August 1, 2018).(If answer is 0, please enter 0. Do not leave any fields blank.)
Transaction Price $
(b)Determine the transaction price for the contract, assuming Teal has limited information with which to develop a reliable estimate of completion by the August 1, 2018, deadline.(If answer is 0, please enter 0. Do not leave any fields blank.)
Transaction Price

$

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Decision Making and Motivating Performance

Authors: Srikant M. Datar, Madhav V. Rajan

1st edition

978-0137024872

Students also viewed these Accounting questions