On April 1st, Ma Construction entered into a contract of one-month duration to build a barn for Valley Properties. Ma is guaranteed to receive a base fee of $5,000 for its services in addition to a bonus depending on when the project is completed. Valley Properties created incentives for Ma to finish the barn as soon as they can without jeopardizing the structural integrity of the barn. Valley offered to pay an additional 30% of the base fee if the project finished 2 weeks early and 10% if the project finished a week early. The probability of finishing 2 weeks early is 30% and the probability of finishing a week early is 60%. What is the expected transaction price with variable consideration estimated as the most likely amount? Group of answer choices $5,000 $5,750 $5,500 $4,750
On April 1st, Ma Construction entered into a contract of one-month duration to build a barn for Valley Properties. Ma is guaranteed to receive a base fee of $5,000 for its services in addition to a bonus depending on when the project is completed. Valley Properties created incentives for Ma to finish the barn as soon as they can without jeopardizing the structural integrity of the barn. Valley offered to pay an additional 30% of the base fee if the project finished 2 weeks early and 10% if the project finished a week early. The probability of finishing 2 weeks early is 30% and the probability of finishing a week early is 60%.
What is the expected transaction price with variable consideration estimated as the most likely amount?
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