Flounder’s Agency sells an insurance policy offered by Capital Insurance Company for a commission of $86...

Flounder’s Agency sells an insurance policy offered by Capital Insurance Company for a commission of $86 on January 2, 2017. In addition, Flounder will receive an additional commission of $10 each year for as long as the policyholder does not cancel the policy. After selling the policy, Flounder does not have any remaining performance obligations. Based on Flounder’s significant experience with these types of policies, it estimates that policyholders on average renew the policy for 4.5 years. It has no evidence to suggest that previous policyholder behavior will change.

Determine the transaction price of the arrangement for Flounder, assuming 100 policies are sold.

Transaction Price. $13,100

Determine the revenue that Flounder will recognize in 2017.

Revenue ___________????

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Expert Solution

ekkarill92 answered 1 year ago

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