* Your answer is incorrect.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 $ProbabilityTransaction price $70 %eTextbook and Media20(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).55(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.11828101139618.5

Transaction price refers to the expected amount while exchanging the goods or services with the…

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

See similar textbooks

Similar questions

On July 1 Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $30.000 at the end of each month, and, if total cost savings reach a specific target. PU will pay an additional $25,000 to Wiggins at the end of the contract Wiggins estimates a 80% chance that cost savings will reach the target Assume that Wiggins estimates uncertain consideration as the most likely amount. Required: Do the following for Wiggins a. Prepare the journal entry on July 31 to record the first month of revenue under the contract b. Assuming total cost savings exceed the target, prepare the journal entry, if any, on October 31 to record receipt of the $25,000 bonus ignore the normal October payment of $30.0001 c. Assuming total cost savings do not reach the target, prepare the journal entry, if…
On July 1, Wiggins Associates enters into a contract to provide consulting services to Pennsylvania University (PU). The contract is anticipated to last four months and is intended to achieve significant cost savings at the university. The contract stipulates that PU will pay Wiggins $25,000 at the end of each month, and, if total cost savings reach a specific target, PU will pay an additional $20,000 to Wiggins at the end of the contract. Wiggins estimates a 75% chance that cost savings will reach the target. Assume that Wiggins estimates variable consideration as the expected value. Required: Prepare the journal entry on July 31 to record the first month of revenue under the contract. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet 1 Record the first month of revenue under the contract.
Indigo Corp. enters into a contract with a customer to build an apartment building for $1,061,800. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $139,200 to be paid if the building is ready for rental beginning August 1, 2021. The bonus is reduced by $46,400 each week that completion is delayed. Indigo commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 1, 2021 August 8, 2021 August 15, 2021 After August 15, 2021 Transaction Price Probability 70 % Transaction Price $ 20 6 (a) Determine the transaction price for the contract, assuming Indigo is only able to estimate whether the building can be completed by August 1, 2021, or not (Indigo estimates that there is a 70% chance that the building will be completed by August 1, 2021). (If answer is O, please enter O. Do not leave any fields blank.) 4 (b) Determine the…
On January 2, 2019, TI enters into a contract with Drewry Corp. to build a new piece of equipment. The contract price is $3,200,000, and construction is expected to take 18 months. Drewry is billed and pays $1,600,000 of the contract price on January 2, 2019, and will pay the balance at completion. TI estimates that the cost of construction will be $2,200,000. Drewry includes two performance bonuses in the contact: • U.S. Bonus: If the equipment design receives a U.S. patent by March 15, 2020, Drewry will pay a $500,000 bonus. • International Bonus: If the equipment receives approval for international distribution by January 31, 2020, Drewry will pay a $1,000,000 bonus. The bonuses are payable when a U.S. patent is approved and when international distribution is approved. On the date the contract is signed, TI estimates that there is an 80% chance it will receive U.S. patent protection by March 15, 2020, but only a 30% chance that the equipment will be approved for…
Flapper Jack's Pancake Restaurants Inc. sells franchises for an initial fee of $38,000 plus operating fees of $700 per month. The initial fee covers site selection, training, computer and accounting software, and on-site consulting and troubleshooting, as needed, over the first five years. On March 15, 2020, Tim Cruise signed a franchise contract, paying the standard $6,400 down with the balance due over five years with interest. Assuming that the initial services to be performed by Flapper Jack's subsequent to the signing are substantial and that collection of the receivable is reasonably assured, the journal entry required at signing would include a credit to: Multiple Choice O Deferred revenue for $38,000. Deferred revenue for $31,600. Franchise fee revenue for $38,000. Franchise fee revenue for $6,400.
YellowStone Construction is constructing an office building under contract for LimeStone Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1300000 each quarter. The total contract price is $15600000 and YellowStone estimates total costs of $17500000. YellowStone estimates that the building will take 3 years to complete, and commences construction on January 2, 2021. At December 31, 2022, YellowStone Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to $17750000 due to unanticipated price increases.YellowStone Construction completes the remaining 25% of the building construction on December 31, 2023, as scheduled. At that time the total costs of construction are $18500000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that YellowStone will recognize for the year ended December 31, 2023? Revenue Expenses…
Metlock Corp. enters into a contract with a customer to build an apartment building for $1,061,500. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $147,900 to be paid if the building is ready for rental beginning August 1, 2021. The bonus is reduced by $49,300 each week that completion is delayed. Metlock commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by August 1, 2021 August 8, 2021 August 15, 2021 After August 15, 2021 Probability Transaction Price $ 70 % 20 5 5 (a) Determine the transaction price for the contract, assuming Metlock is only able to estimate whether the building can be completed by August 1, 2021, or not (Metlock estimates that there is a 70% chance that the building will be completed by August 1, 2021). (If answer is 0, please enter 0. Do not leave any fields blank.) (b) Determine the transaction price for…
Campus Cellular provides cell phones and 1 year of cell service to students for an upfront, nonrefundable fee of $300 and a usage fee of $5 per month. Students may renew the service without paying another upfront fee for each year they are on campus (on average, students renew their service one time). What amount of revenue should Campus Cellular recognize in the first year of the contract?
Garland Inc. offers a new employee a single-sum signing bonus at the date of employment, June 1, 2021. Alternatively, the employee can receive $39,000 at the date of employment plus $10,000 each June 1 for five years, beginning in 2025. Assuming the employee's time value of money is 9% annually, what single amount of the employment date would make the options equally desirable? (EV. of $1. PV of $1. EVA of $1. PVA of $1 EVAD of 51 and PVAD of 5) (Use appropriate factor(s) from the tables provided.) Pr
Whispering Corp. enters into a contract with a customer to build an apartment building for $1,300,000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $195,000 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $65,000 each week that completion is delayed. Whispering commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes. August 1, 2026 August 8, 2026 August 15, 2026 After August 15, 2026 Transaction price LA 70% $ 20 Determine the transaction price for this contract. 5 5
A company enters into a contract with a customer to build a building, with a performance bonus of $33,500 if the building is completed by September 30, 2021. The bonus is reduced by $5,000 each week that completion is delayed. The company commonly includes these completion bonuses in its contracts and, based on prior experience, estimates the following completion outcomes: Completed by ProbabilitySeptember 30, 2021 70%October 7, 2021 15%October 14, 2021 10%October 21, 2021 5%The amount of revenue the company should recognize related to this bonus is $_______________.
ABC Inc, a telecommunications operator, entered into a contract with Mr. X on March 1, 20x2. In line with the contract, Mr. X will subscribe to ABC Inc's monthly plan for 12 months and in return Mr. X receives a free cellphone from ABC Inc. Mr. X will pay a monthly fee of P5,000. Mr. X will get immediately the handset after the contract signing. ABC Inc sells the same handset for P26,000 and the same monthly plan for P3,250 per month without the handset. Determine the revenue to recognized by H Inc. on April 30, 20x7. [A] 27,000 [B] 5,000 [C] 3,250 [D] 3,000

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS