Question
In: Accounting
Indigo Corp. enters into a contract with a customer to build an apartment building for $1,061,800....
Indigo Corp. enters into a contract with a customer to build an
apartment building for $1,061,800. The customer hopes to rent
apartments at the beginning of the school year and provides a
performance bonus of $139,200 to be paid if the building is ready
for rental beginning August 1, 2021. The bonus is reduced by
$46,400 each week that completion is delayed. Indigo commonly
includes these completion bonuses in its contracts and, based on
prior experience, estimates the following completion
outcomes:
| Completed by | Probability | ||
|---|---|---|---|
|
August 1, 2021 |
70 | % | |
|
August 8, 2021 |
20 | ||
|
August 15, 2021 |
6 | ||
|
After August 15, 2021 |
4 | ||
Determine the transaction price for this contract.
| Transaction Price | $enter the transaction price for this contract |
Solutions
Expert Solution
| A | B | A x B | |
| Completed by | Probability | Bonus | Expected Bonus |
| August 1, 2021 | 70% | 139,200 | 97,440 |
| August 8, 2021 | 20% | 92,800 | 18,560 |
| August 15, 2021 | 6% | 46,400 | 2,784 |
| After August 15, 2021 | 4% | - | - |
| Total | 118,784 | ||
| Transaction Price | $ 1,180,584 | =1061800+118784 | |
ekkarill92 answered 3 years agoRelated Solutions
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Problem 5
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3,800,000
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