Question
Pina Colada Corp. enters into a contract with a customer to build an apartment building for $930,000. The customer hopes to rent apartments at the
Pina Colada Corp. enters into a contract with a customer to build an apartment building for $930,000. The customer hopes to rent apartments at the beginning of the school year and offers a performance bonus of $145,500 to be paid if the building is ready for rental beginning August 1, 2020. The bonus is reduced by $48,500 each week that completion is delayed. Pina Colada commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:
Completed by Probability
August 1, 2020 65%
August 8, 2020 20
August 15, 2020 10
After August 15, 2020 5
Determine the transaction price for this contract under IFRS.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started