ACCT $311,$ Ch $16,17,22$ & $23$

Question $6$ of $20$

$\frac{3}{6}$

Garcia Corp. enters into a contract with a customer to build an apn$--$ nent building for $$1,061,800.$ The customer hopes to rent apartments at the beginning of the school year and provides a pertormance bonus of $$139,200$ to be paid if the ding is ready for rental beginning August $1,2026.$ The bonus is reduced by $$46,400$ each week that comnletion is delayed. Garcla commonly includes these completion bonuses in its contracts and, based on prior experience, estimates th ollowing completion outcomes:

$\backslash$table$[[$Completed by$,$Probability$],[$August $1,2026,70\%],[$August $8,2026,20],[$August $15,2026,6],[$After August $15,2026,4]]$

$($a$)$ Determine the transaction price for the contract, assuming Garcia is only able to estimate whether the building can be completed by August $1,2026$; or not $($Garcia estimates that there is a $70\%$ chance that the building will be completed by August $1,2026).$

Transaction price $,$$$|||$

$($b$)$ Determine the transaction price for the contract, assuming Garcia has limited information with which to develop a reliable estimate of completion by the August $1,2026,$ deadline.

Transaction price $ $$