[Solved] In February 2016,Omnibus Interior Corporation Enters into a Contract with Pike

Question 257
Essay

In February 2016,Omnibus Interior Corporation enters into a contract with Pike Realty to remodel a 6-unit luxury condominium in New York City.Under the contract,the company is entitled to receive a fixed fee of $1 million,and an additional performance bonus of $500,000 if the property is sold during the same year.
Required: Given a strong demand for housing,Omnibus estimates that the property would most likely be sold within the same year,and bases estimates of variable consideration on the most likely estimate.On what transaction price should Omnibus base revenue recognition?

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