Exercise 18-7 (Part Level Submission)

Swifty Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development. Swifty will receive a payment of $10,300,000 if the drug receives regulatory approval. Based on prior experience in the drug-approval process, Swifty determines it is 90% likely that the drug will gain approval and a 10% chance of denial.

(a)

Determine the transaction price of the arrangement for Swifty Biotech.

Transaction price$