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  3. 4. on august 13th, truman the builder entered into

4. On August 13th, Truman the Builder entered into a contract...

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Accounting

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4. On August 13th, Truman the Builder entered into a contract of one-month duration to build a barn for Nolan. Truman is guaranteed to receive a base fee of $15,000 for his services in addition to a bonus depending on when the project is completed. Nolan created incentives for Truman to finish the barn as soon as he can without jeopardizing the structural integrity of the barn. Nolan offered to pay an additional 3% of the base fee for each week the project completion is early. In addition, Truman the Builder will incur a penalty of 2% of the base fee for each week the project completion is late. Truman the Builder's management provided the following probability distribution for each possible completion week. Assuming the estimated variable consideration is not subject to a significant reversal, what is the amount of the bonus/penalty that Truman the Builder should include in the transaction price using the expected value approach? ( 2 points)

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