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Young Corp. enters into a contract with a customer to build an apartment building for $1,045,500. The customer hopes to rent apartments at the beginning
Young Corp. enters into a contract with a customer to build an apartment building for $1,045,500. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $139,800 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $46,600 each week that completion is delayed. Young commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: (a) Determine the transaction price for the contract, assuming Young is only able to estimate whether the building can be completed by August 1, 2026, or not (Young estimates that there is a 70% chance that the building will be completed by August 1,2026 ). Transaction price $ (b) Determine the transaction price for the contract, assuming Young has limited information with which to develop a reliable estimate of completion by the August 1,2026 , deadline. Transaction price $
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