Question $3$: Variable Consideration $$ Expected Value and Most Likely Amount

$$ Contract to build a warehouse for $$200,000,$ with a performance bonus of $$10,000$ based on the timing of completion

$$ Performance bonus decreases by $25\%$ per week for every week beyond the agreed$-$upon completion date

$$ Probability the contract will be completed:

a$.50\%$ by the agreed$-$upon completion date

b$.30\%,$ one week late

c$.20\%,$ two weeks late

Instructions

Calculate the transaction price using

a$.$ Expected value method

b$.$ Most likely amount method