Abrams Incorporated owns and operates high-priced ski resorts in Europe. Abrams recently entered into a contract...
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Abrams Incorporated owns and operates high-priced ski resorts in Europe. Abrams recently entered into a contract to provide lodging for several corporate events and conferences sponsored by PowCo for a total fee of $10,070,000. PowCo agreed to additional fees based on conference participant satisfaction surveys. The fee schedule and the related satisfaction survey scores are presented below. (Click the icon to view the schedule.) Using past survey experience, Abrams estimates the probabilities that it will receive these scores on the PowCo participant surveys. (Click the icon to view the probabilities.) Requirement Using the most-likely-amount approach for measuring variable consideration, determine the transaction price for this contract. Determine the transaction price for the contract using the most-likely-amount approach. The estimated transaction price for the contract using the most-likely-amount approach is р np Additional Fee $54,000 $309,000 $750,000 $970,000 Average Score on Participant Satisfaction Survey 75% -79% 80% - 84% 85% -89% 90% - 100% Average Score on Participant Satisfaction Survey 75% -79% 80%84% 85% -89% 90%-100% Probability Assessment 11 % 16 % 22% 51% Determine the transaction price for the contract using the most-likely-amount approach. The estimated transaction price for the contract using the most-likely-amount approach is Abrams Incorporated owns and operates high-priced ski resorts in Europe. Abrams recently entered into a contract to provide lodging for several corporate events and conferences sponsored by PowCo for a total fee of $10,070,000. PowCo agreed to additional fees based on conference participant satisfaction surveys. The fee schedule and the related satisfaction survey scores are presented below. (Click the icon to view the schedule.) Using past survey experience, Abrams estimates the probabilities that it will receive these scores on the PowCo participant surveys. (Click the icon to view the probabilities.) Requirement Using the most-likely-amount approach for measuring variable consideration, determine the transaction price for this contract. Determine the transaction price for the contract using the most-likely-amount approach. The estimated transaction price for the contract using the most-likely-amount approach is р np Additional Fee $54,000 $309,000 $750,000 $970,000 Average Score on Participant Satisfaction Survey 75% -79% 80% - 84% 85% -89% 90% - 100% Average Score on Participant Satisfaction Survey 75% -79% 80%84% 85% -89% 90%-100% Probability Assessment 11 % 16 % 22% 51% Determine the transaction price for the contract using the most-likely-amount approach. The estimated transaction price for the contract using the most-likely-amount approach is
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Solution Transaction Price Probability 10070000 54000 10124... View the full answer
Related Book For
Business Law The Ethical Global and E-Commerce Environment
ISBN: 978-0071317658
15th edition
Authors: Jane Mallor, James Barnes, Thomas Bowers, Arlen Langvardt
Posted Date:
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