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Walker Corp. enters into a contract with a customer to build an apartment building for $910,000. The customer hopes to rent apartments at the
Walker Corp. enters into a contract with a customer to build an apartment building for $910,000. The customer hopes to rent apartments at the beginning of the school year and offers a performance bonus of $126,000 to be paid if the building is ready for rental beginning August 1, 2023. The bonus is reduced by $42,000 each week that completion is delayed. Walker commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability August 1, 2023 61 % August 8, 2023 20 August 15, 2023 14 After August 15, 2023 5 (a) Your answer is incorrect. Determine the transaction price for this contract, assuming Walker is only able to estimate whether the building can be completed by August 1, 2023, or not. (Walker estimates that there is a 61% chance that the building will be completed by August 1, 2023.) Transaction price $
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