A company enters into a contract with a customer to build a building, with a performance bonus of $33,500 if the building is completed by September 30, 2021. The bonus is reduced by $5,000 each week that completion is delayed. The company commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability September 30, 2021 70% October 7, 2021 15% October 14, 2021 10% October 21, 2021 5% The amount of revenue the company should recognize related to this bonus is $_______________.
A company enters into a contract with a customer to build a building, with a performance bonus of $33,500 if the building is completed by September 30, 2021. The bonus is reduced by $5,000 each week that completion is delayed. The company commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability September 30, 2021 70% October 7, 2021 15% October 14, 2021 10% October 21, 2021 5% The amount of revenue the company should recognize related to this bonus is $_______________.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company enters into a contract with a customer to build a building, with a performance bonus of $33,500 if the building is completed by September 30, 2021. The bonus is reduced by $5,000 each week that completion is delayed. The company commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:
Completed by Probability
September 30, 2021 70%
October 7, 2021 15%
October 14, 2021 10%
October 21, 2021 5%
The amount of revenue the company should recognize related to this bonus is $_______________.
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