Oriole Construction enters into a contract with a customer to build a warehouse for $ 860000 on March 30, 2021 with a performance bonus of $ 60000 if the building is completed by July 31, 2021. The bonus is reduced by $ 12000 each week that completion is delayed. Oriole commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by Probability July 31, 2021 60% August 7, 2021 30% August 14, 2021 5% August 21, 2021 5%

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Oriole Construction enters into a contract with a customer to build a warehouse for $ 860000 on March 30, 2021 with a performance bonus of $ 60000 if the building is completed by July 31, 2021. The bonus is reduced by $ 12000 each week that completion is delayed. Oriole commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:

Completed by Probability
July 31, 2021 60%
August 7, 2021 30%
August 14, 2021 5%
August 21, 2021 5%


The transaction price for this transaction is

$ 913400
$ 557400
$ 860000
$ 569400
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