Computing a Transaction Price and Identifying the Proper Accounting

On June $1,$ Consulting Inc. enters into a contract with a customer to build a website for its start$-$up business for $$75,000,$ plus a possible performance bonus. The contract includes the creation of the website as a vehicle to communicate information about the customer's products, to sell products, and to collect payment for the products. The pricing of the customized website project includes a performance bonus of $$15,000$ to be paid to Consulting Inc. if the website is completed by July $31.$ The performance bonus will be reduced for each week beyond the due date $($up to three weeks$).$

Consulting Inc. is unable to estimate the probabilities of all possible outcomes. Based on past experience, Consulting Inc. believes that there is a $60\%$ chance that it will complete the customized website by July $31$ and a $40\%$ chance that it will not.

a$.$ Indicate which method is appropriate in estimating the variable consideration.

b$.$ Compute the transaction price for Consulting Inc.$\text{'}$s revenue contract.

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