Martin Corp. enters into a contract with a customer to build an apartment building for $987,800. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $157,500 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $52,500 each week that completion is delayed. Martin commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 1, 2026 Probability 70 % August 8, 2026 20 August 15, 2026 6 After August 15, 2026 4 Determine the transaction price for this contract. Transaction price $ P

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
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Martin Corp. enters into a contract with a customer to build an apartment building for $987,800. The customer hopes to rent
apartments at the beginning of the school year and provides a performance bonus of $157,500 to be paid if the building is ready for
rental beginning August 1, 2026. The bonus is reduced by $52,500 each week that completion is delayed. Martin commonly includes
these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:
Completed by
August 1, 2026
Probability
70 %
August 8, 2026
20
August 15, 2026
6
After August 15, 2026
4
Determine the transaction price for this contract.
Transaction price
$
P
Transcribed Image Text:Martin Corp. enters into a contract with a customer to build an apartment building for $987,800. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $157,500 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $52,500 each week that completion is delayed. Martin commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 1, 2026 Probability 70 % August 8, 2026 20 August 15, 2026 6 After August 15, 2026 4 Determine the transaction price for this contract. Transaction price $ P
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