Question
Donner Construction enters into a contract with a customer to build a warehouse for $600,000 on March 30, 2017 with a performance bonus of $30,000
Donner Construction enters into a contract with a customer to build a warehouse for $600,000 on March 30, 2017 with a performance bonus of $30,000 if the building is completed by August 31, 2017. The bonus is reduced by $10,000 each week that completion is delayed. Donner commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:
Completed by Probability
August 31, 2017 60% probablity
September 7, 2017 30%
September 14, 2017 10%
What is the transaction price for this transaction?
$615,000
$630,000
$600,000
$625,000
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