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Carla Vista Construction Company enters into a contract with a customer to build a warehouse for $407,000, with a performance bonus of $203,500 that will
Carla Vista Construction Company enters into a contract with a customer to build a warehouse for $407,000, with a performance bonus of $203,500 that will be paid based on the timing of completion. The amount of the performance bonus decreases by 10% per week for every week beyond the agreed-on completion date. The contract requirements are similar to contracts that Carla Vista has performed previously, and management believes that such experience is predictive for this contract. Management estimates that there is a 60% probability that the contract will be completed by the agreed-on completion date, a 30% probability that it will be completed one week late, and a 10% probability that it will be completed two weeks late. (a) Your answer has been saved. See score details after the due date. How should Carla Vista measure the transaction price? What is the transaction price? Transaction price $
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