Question: On March 1 , 2 0 1 9 , Elkhart enters into a new contract to build a specialized warehouse for $ 7 million. The

On March

1, 2019,

Elkhart enters into a new contract to build a specialized warehouse for $

7

million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November

30, 2019,

Elkhart will receive a bonus of $

600, 000 .

For every week after November

30

that the warehouse is not usable, the bonus will decrease by $

150, 000 .

Elkhart provides the following completion schedule:

Expected Completion DateProbabilityNovember

30, 201960 %

December

7, 201920

December

14, 201910

December

21, 20195

December

28, 20195

Required:

Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price?

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