Skivoso Incorporated owns and operates high- priced ski resorts in Europe. Skivoso recently entered into a contract to provide lodging for several corporate events and conferences sponsored by JeffCo for a total fee of $ 10,000,000. JeffCo agreed to additional fees based on conference participant satisfaction surveys. The fee schedule and the related satisfaction survey scores are presented below.
Additional Fee Average Score on Participant Satisfaction Survey
$ 50,000 …………………………… 75%– 79%
$ 300,000 ………………………… 80%– 84%
$ 700,000 ………………………… 85%– 89%
$ 950,000………………………… 90%– 100%
Using past survey experience, Skivoso estimates the probabilities that it will receive these scores on the JeffCo participant surveys:
Average Score on Participant Satisfaction Survey Probability Assessment
75%– 79% ……………………………………………………….. 9%
80%– 84% ……………………………………………………… 18%
85%– 89% ……………………………………………………… 21%
90%– 100%……………………………………………………… 52%
Required
Using the most-likely-amount approach for measuring variable consideration, determine the transaction price for this contract.