On April 1st, Tesla entered into a contract of one-month duration to build a barn for Amazon. Tesla is guaranteed to receive a base fee of $5,300 for his services in addition to a bonus depending on when the project is completed. Amazon created incentives for Tesla to finish the barn as soon as he can without jeopardizing the structural integrity of the barn. Amazon offered to pay an additional 30% of the base fee if the project finished 2 weeks early and 10% if the project finished a week early. The probability of finishing 2 weeks early is 30% and the probability of finishing a week early is 60%. What is the expected transaction price with variable consideration estimated as the expected value? Multiple Choice $5,300 $7,095 $5,035 $6,095

On April 1st, Tesla entered into a contract of one-month duration to build a barn for Amazon. Tesla is guaranteed to receive a base fee of $5,300 for his services in addition to a bonus depending on when the project is completed. Amazon created incentives for Tesla to finish the barn as soon as he can without jeopardizing the structural integrity of the barn. Amazon offered to pay an additional 30% of the base fee if the project finished 2 weeks early and 10% if the project finished a week early. The probability of finishing 2 weeks early is 30% and the probability of finishing a week early is 60%. What is the expected transaction price with variable consideration estimated as the expected value? Multiple Choice $5,300 $7,095 $5,035 $6,095

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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On January 1, 2018 The Village of Port Jefferson engaged to Frog Construction company to construct amunicipal office complex. The three-year a to receive 10 million in cash payments from the city in threeinstallments: 25% when the project was 30% complete; 25% when the project was 60% complete; and50%when the project was fully complete. The contract required that Frog's completion estimates be certifiedby an independent consultant before payments were made.During the first year of the contract, Frog completed 30% of the contract and incurred costs of 2,490,000.During the second year, the project was certified as being 60% complete and Frog incurred costs of3,100,000.During the third year, Frog completed the project and incurred costs of 3,110,000.Assuming Frog had no other revenues or expenses, determine the profit on construction for 2018, 2019,and 2020 under the following methods: A. Percentage Calculation B. Completed Contract
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