Draker Corporation entered into a contract with a customer to build a warehouse for $1,900,000 on March 18, 2017 with a performance bonus of $100,000 if the building is completed by July 31, 2017. The bonus is reduced by $20,000 each week that completion is delayed. Draker commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by July 31, 2017 August 7, 2017 August 14, 2017 August 21, 2017 Probability 65% 25% 5% 5% Using the expected value method, the transaction price for this transaction is O $1,900,000 51.370.000 O$1,990,000 O$1,305,000

Draker Corporation entered into a contract with a customer to build a warehouse for $1,900,000 on March 18, 2017 with a performance bonus of $100,000 if the building is completed by July 31, 2017. The bonus is reduced by $20,000 each week that completion is delayed. Draker commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by July 31, 2017 August 7, 2017 August 14, 2017 August 21, 2017 Probability 65% 25% 5% 5% Using the expected value method, the transaction price for this transaction is O $1,900,000 51.370.000 O$1,990,000 O$1,305,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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Subject: accounting
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