On March 1, 2024, Leo Consulting enters into a contract with Highgate University to restructure Highgate's processes for purchasing goods from suppliers. The contract states that Leo will earn a fixed fee of $26,000 and work is completed as of March 31, 2024. If Highgate achieves $50,000 of cost savings within six months of the contract, Leo will be paid an additional $5,000. Leo estimates a 65% chance that Highgate will achieve the cost savings target. Assuming that Leo determines the transaction price as the expected value of expected consideration. On September 30, Highgate University is paid the $5,000 bonus. Required: Provide the journal entries for March 31, 2024 and September 30, 2024.
On March 1, 2024, Leo Consulting enters into a contract with Highgate University to restructure Highgate's processes for purchasing goods from suppliers. The contract states that Leo will earn a fixed fee of $26,000 and work is completed as of March 31, 2024. If Highgate achieves $50,000 of cost savings within six months of the contract, Leo will be paid an additional $5,000. Leo estimates a 65% chance that Highgate will achieve the cost savings target. Assuming that Leo determines the transaction price as the expected value of expected consideration. On September 30, Highgate University is paid the $5,000 bonus. Required: Provide the journal entries for March 31, 2024 and September 30, 2024.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:1. On March 1, 2024, Leo Consulting enters into a contract with Highgate University to
restructure Highgate's processes for purchasing goods from suppliers. The contract states
that Leo will earn a fixed fee of $26,000 and work is completed as of March 31, 2024. If
Highgate achieves $50,000 of cost savings within six months of the contract, Leo will be paid
an additional $5,000. Leo estimates a 65% chance that Highgate will achieve the cost
savings target.
Assuming that Leo determines the transaction price as the expected value of expected
consideration.
On September 30, Highgate University is paid the $5,000 bonus.
Required: Provide the journal entries for March 31, 2024 and September 30, 2024.
Date
Account Names
Debt
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