Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Pina Corp. enters into a contract with a customer to build an apartment building for $921,300. The customer hopes to rent apartments at the
Pina Corp. enters into a contract with a customer to build an apartment building for $921,300. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $156,000 to be paid if the building is ready for rental beginning August 1, 2021. The bonus is reduced by $52,000 each week that completion is delayed. Pina commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 1, 2021 August 8, 2021 August 15, 2021 After August 15, 2021 Probability 70 % 20 6 4 (a) Determine the transaction price for the contract, assuming Pina is only able to estimate whether the building can be completed by August 1, 2021, or not (Pina estimates that there is a 70% chance that the building will be completed by August 1, 2021). (If answer is 0, please enter O. Do not leave any fields blank.) Transaction Price $ (b) Determine the transaction price for the contract, assuming Pina has limited information with which to develop a reliable estimate of completion by the August 1, 2021, deadline. Transaction Price $
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