On June 1, 2020, Consulting Inc. enters into a contract with a customer to build a...

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On June 1, 2020, Consulting Inc. enters into a contract with a customer to build a website for its start-up business for $62,500, 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 $12,500 to be paid to Consulting Inc. if the website is completed by July 31, 2020. The performance bonus will be reduced for each week beyond the due date (up to three weeks). Based on Consulting Inc.'s historical experience and the assessment of its current capabilities, the following outcomes are estimated. Completion Date Probability of Outcome Performance Bonus July 31, 2020 50% $12.500 Aug. 7, 2020 3096 10,000 Aug. 14, 2020 10% 7,500 Aug. 21, 2020 1096 5,000 Indicate which method is appropriate in estimating the variable consideration. Estimate the transaction price for Consulting Inc.'s revenue contract. On June 1, 2020, Consulting Inc. enters into a contract with a customer to build a website for its start-up business for $62,500, 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 $12,500 to be paid to Consulting Inc. if the website is completed by July 31, 2020. The performance bonus will be reduced for each week beyond the due date (up to three weeks). Based on Consulting Inc.'s historical experience and the assessment of its current capabilities, the following outcomes are estimated. Completion Date Probability of Outcome Performance Bonus July 31, 2020 50% $12.500 Aug. 7, 2020 3096 10,000 Aug. 14, 2020 10% 7,500 Aug. 21, 2020 1096 5,000 Indicate which method is appropriate in estimating the variable consideration. Estimate the transaction price for Consulting Inc.'s revenue contract.

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