Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas's contractspecifies that it will receive a flat fee of $56,000 and an additional $26,000 if Bran reaches a prespecified target amount of costsavings. Thomas estimates that there is a 20% chance that Bran will achieve the cost-savings target.Required:1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price.2. Assuming Thomas uses the most likely value as its estimate of variable consideration, calculate the transaction price.3. Assume Thomas uses the expected value as its estimate of variable consideration, but is very uncertain of that estimate due to alack of experience with similar consulting arrangements. Calculate the transaction price.Complete this question by entering your answers in the tabs below.Req 1Req 2 and 32. Assuming Thomas uses the most likely value as its estimate of variable consideration, calculate the transaction price.3. Assume Thomas uses the expected value as its estimate of variable consideration, but is very uncertain of that estimatedue to a lack of experience with similar consulting arrangements. Calculate the transaction price.2. Transaction price3 Transaction price< Req 1Req 2 and 3

Revenue Recognition means the recording of revenues of an entity in its books. It is an accrual…

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas's contract specifies that it will receive a flat fee of $56,000 and an additional $26,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 20% chance that Bran will achieve the cost-savings target.

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas's contract specifies that it will receive a flat fee of $56,000 and an additional $26,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 20% chance that Bran will achieve the cost-savings target.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives. Thomas's contract
specifies that it will receive a flat fee of $56,000 and an additional $26,000 if Bran reaches a prespecified target amount of cost
savings. Thomas estimates that there is a 20% chance that Bran will achieve the cost-savings target.
Required:
1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the transaction price.
2. Assuming Thomas uses the most likely value as its estimate of variable consideration, calculate the transaction price.
3. Assume Thomas uses the expected value as its estimate of variable consideration, but is very uncertain of that estimate due to a
lack of experience with similar consulting arrangements. Calculate the transaction price.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 and 3
2. Assuming Thomas uses the most likely value as its estimate of variable consideration, calculate the transaction price.
3. Assume Thomas uses the expected value as its estimate of variable consideration, but is very uncertain of that estimate
due to a lack of experience with similar consulting arrangements. Calculate the transaction price.
2. Transaction price
3 Transaction price
< Req 1
Req 2 and 3

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