Murkey Consultants provided Lamba Construction with assistance in implementing various cost-savings initiatives. Murkey’s contract specifies that...

Murkey Consultants provided Lamba Construction with assistance in implementing various cost-savings initiatives. Murkey’s contract specifies that it will receive a flat fee of $100,000 and an additional $40,000 if Lamba reaches a prespecified target amount of cost savings. Murkey estimates that there is a 20% chance that Lamba will achieve the cost-savings target.

Required:

Assuming Murkey uses the expected value as its estimate of variable consideration, calculate the transaction price.
Assuming Murkey uses the most likely value as its estimate of variable consideration, calculate the transaction price.
Assume Murkey uses the expected value as its estimate of variable consideration, but is very uncertain of that estimate due to a lack of experience with similar consulting arrangements. Calculate the transaction price.

Solutions

Expert Solution

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that...

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that it will receive a flat fee of $51,000 and an additional $21,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 25% chance that Bran will achieve the cost-savings target. Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price. 2. Assuming Thomas uses the most likely value as...

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that...

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that it will receive a flat fee of $58,000 and an additional $28,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 35% chance that Bran will achieve the cost-savings target. Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price. 2. Assuming Thomas uses the most likely value as...

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that...

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that it will receive a flat fee of $53,000 and an additional $23,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 20% chance that Bran will achieve the cost-savings target. Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price. 2. Assuming Thomas uses the most likely value as...

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that...

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that it will receive a flat fee of $66,000 and an additional $36,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 25% chance that Bran will achieve the cost-savings target. Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price. 2. Assuming Thomas uses the most likely value as...

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that...

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that it will receive a flat fee of $57,000 and an additional $27,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 25% chance that Bran will achieve the cost-savings target. Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price. 2. Assuming Thomas uses the most likely value as...

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas’s contract specifies that it will receive a flat fee of $50,000 and an additional $20,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 20% chance that Bran will achieve the cost-savings target. Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price. 2. Assuming Thomas uses the most likely value as its...

ABC Construction has the following contract: Contract price 1,000,000 Cost incurred cost to complete Dec 31...

ABC Construction has the following contract: Contract price 1,000,000 Cost incurred cost to complete Dec 31 2017 200,000 600,000 Dec 31 2018 350,000 250,000 Dec 31 2019 300,000 850,000 Billings Cash Received Dec 31 2017 250,000 200,000 Dec 31 2018 400,000 350,000 Dec 31 2019 350,000 450,000 1,000,000 1,000,000 A. Prepare a % of completion schedule for the three years B. Prepare journal entries for 3 years

Q4. Discuss the various reports provided by cost accounting department.

1. 14 marks Contract price $ 3,140,000 Total estimated construction cost at contract inception $ 2,305,000...

1. 14 marks Contract price $ 3,140,000 Total estimated construction cost at contract inception $ 2,305,000 2020 2021 2022 Total costs incurred to date $ 691,500 $ 1,540,500 $ 2,350,000 Estimated costs to complete $ 1,613,500 $ 829,500 $ - Customer billings to date $ 625,000 $ 2,175,000 $ 3,140,000 Collections to date $ 600,000 $ 1,790,000 $ 2,899,000 Required: 1. Calculate the gross profit that should be recognized for 2020, 2021, and 2022, using the percentage of completion method....

(cost of restrictive covenant) peachtree construction has a restrictive covenant in a loan contract that essentially...

(cost of restrictive covenant) peachtree construction has a restrictive covenant in a loan contract that essentially prohibits the expansion of the firm into a new line of business that it is considering. the cost of this restriction is estimated to be $20 million. The debt can be called off and paid early by paying a $5 million penalty. What should peachtree do?

Subjects