[Solved] Omni-Resistor,Inc

Question 261

Omni-Resistor,Inc.specializes in waterproofing homes,office buildings and other structures.Recently it completed a waterproofing renovation for a building at a local university.The contract specifies that Omni-Resistor will receive a flat lump sum of $100,000 for the renovation,and an additional $2,500 if there is no roof leaking through the roof within the first year after the renovation.The seller estimates that there is an 85% chance that no leakage will occur within the first year.
Required: (a)Assuming Omni-Resistor uses the most likely value to estimate the variable consideration,calculate the transaction price.(b)Assuming Omni-Resistor determines transaction price as the "expected value" of the variable consideration,calculate the transaction price.(c)Assume Omni-Resistor uses the "expected value" approach,but is very uncertain of that estimate due to a lack of experience with similar renovations.Calculate the transaction price.

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