William Corp. enters into a contract with a customer to build an apartment building for $1,056,300. The customer hopes to rentapartments at the beginning of the school year and provides a performance bonus of $136,200 to be paid if the building is ready forrental beginning August 1, 2026. The bonus is reduced by $45,400 each week that completion is delayed. William commonly includesthese completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes:Completed byAugust 1, 2026August 8, 2026August 15, 2026After August 15, 2026Transaction price$Probability70 %Transaction price $20(a) Determine the transaction price for the contract, assuming William is only able to estimate whether the building can be completedby August 1, 2026, or not (William estimates that there is a 70% chance that the building will be completed by August 1, 2026).55115770(b) Determine the transaction price for the contract, assuming William has limited information with which to develop a reliableestimate of completion by the August 1, 2026, deadline.1172070

Weather The building can be completed by 1 / august / 2026 Or not The contract price along with…

Answered: William Corp. enters into a contract…

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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William Corp. enters into a contract with a customer to build an apartment building for $1,056,300. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $136,200 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $45,400 each week that completion is delayed. William commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 1, 2026 August 8, 2026 August 15, 2026 After August 15, 2026 Transaction price $ Probability LA 70 % 20 Determine the transaction price for this contract. 5 5 SUPPORT
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