Bonita Corp. enters into a contract with a customer to build an apartment building for $960,000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $144,000 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $48,000 each week that completion is delayed. Bonita 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 70% Transaction price $ 20 5 5 Determine the transaction price for this contract. 1

Bonita Corp. enters into a contract with a customer to build an apartment building for $960,000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of $144,000 to be paid if the building is ready for rental beginning August 1, 2026. The bonus is reduced by $48,000 each week that completion is delayed. Bonita 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 70% Transaction price $ 20 5 5 Determine the transaction price for this contract. 1

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 9MC

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