Indigo Corp. enters into a contract with a customer to build an apartment building for $1,061,800. The customer hopes to rentapartments at the beginning of the school year and provides a performance bonus of $139,200 to be paid if the building is ready forrental beginning August 1, 2021. The bonus is reduced by $46,400 each week that completion is delayed. Indigo commonly includesthese completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:Completed byAugust 1, 2021August 8, 2021August 15, 2021After August 15, 2021Transaction PriceProbability70 %Transaction Price $206(a) Determine the transaction price for the contract, assuming Indigo is only able to estimate whether the building can be completed byAugust 1, 2021, or not (Indigo estimates that there is a 70% chance that the building will be completed by August 1, 2021). (If answer isO, please enter O. Do not leave any fields blank.)4(b) Determine the transaction price for the contract, assuming Indigoof completion by the August 1, 2021, deadline.limited informat with which to develop a reliable estimate

Transaction price refer to an expected value of payment that is paid to the contractor for…

Answered: Indigo Corp. enters into a contract…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Rakesh
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