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Indigo Corp. enters into a contract with a customer to build an apartment building for $1, 079, 000. The customer hopes to rent apartments at
Indigo Corp. enters into a contract with a customer to build an apartment building for $1, 079, 000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $153, 000 to be paid if the building is ready for rental beginning August 1, 2018. The bonus is reduced by $51, 000 each week that completion is delayed. Indigo commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: (a) Determine the transaction price for the contract, assuming Indigo is only able to estimate whether the building can be completed by August 1, 2018, or not (Indigo 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 eave any fields blank.) Transaction Price $ 1232000 b Determine the transaction price or the contract, assuming Indigo 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 $ 1079000
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