Question:$1($QId:$2083883)$

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In May, the city council of Oshawa, Ontario, awarded a $$7\mathrm{.}6$ million contract to Build$-$It Corp. $($BIC$)$ to construct a new community centre in the city. The contract included a clause that provided for an early$-$completion bonus if BIC finished the project at least one month before the scheduled completion date of October $31.$

The bonus completion schedule, together with BIC$$s senior management$$s estimates as to the probability of finishing by the specified dates, follows:

Project completion dateBonus paymentEstimated probabilityPrior to July $31$$$400,00010\%$Between August $1$ and $31$$$300,00020\%$Between September $1$ and $30$$$200,00040\%$October $1,$ or later$$030\%$

BIC$$s year end is December $31.$ It reports its financial results in accordance with IFRS and uses the most likely amount to estimate variable consideration.

What transaction price should be used to recognize revenue for this contract?

A $$7,800,000$B $$7,600,000$C $$7,680,000$D $$7,780,000$

$0$

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