On March 1, 2017, Elkhart enters into a new contract to build a specialized warehouse for $7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2017, Elkhart will receive a bonus of $700,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by $150,000. Elkhart provides the following completion schedule:

Probability of Completion:

November 30, 2017 50%

December 7, 2017 20%

December 14, 2017 15%

December 21, 2017 10%

December 28, 2017 5%

Assume that Elkhart uses the probability-weighted amount to determines the transaction price given that this contract contained a variable consideration component.

Determine the transaction price on March 1, 2017 assuming the company believes the variable consideration is reasonably assured and is not constrained.