Question
Skysong Corp. enters into a contract with a customer to build an apartment building for $1,039,000. The customer hopes to rent apartments at the beginning
Skysong Corp. enters into a contract with a customer to build an apartment building for $1,039,000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $148,200 to be paid if the building is ready for rental beginning August 1, 2018. The bonus is reduced by $49,400 each week that completion is delayed. Skysong commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:
Completed by | Probability | ||
August 1, 2018 | 70 | % | |
August 8, 2018 | 20 | ||
August 15, 2018 | 5 | ||
After August 15, 2018 | 5 |
Determine the transaction price for this contract.
Transaction Price |
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