Revenue recognition criteria help ensure that an income statement reflects the actual accomplishments of a company for the reporting period. The FASB and IASB together recently changed this guidance. The FASB issued the converged standard as Accounting Standards Update (ASU) No. 201409, Revenue from Contracts with Customers. It is very comprehensive, replacing the large amount of general and industry-specific revenue recognition guidance in current use. It also is almost completely converged with IFRS.

Peculiar Recommendation Vendors (PERV) provided S & M Leather Goods with assistance in implementing various cost-savings initiatives for its tanning operations. PERVs contract specifies that it will receive a flat rate of $50,000 and an additional $20,000 if S & M reaches a prespecified target amount of cost savings. PERV estimates that there is a 20% chance that S & M will achieve the cost-savings target.

Required:

Assuming PERV uses an expected value estimate of variable consideration, calculate the amount of the transaction price.