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ABC Company enters a contract with Edmond Ubrary to help them streamilne their purchasing process....

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Accounting

ABC Company enters a contract with Edmond Ubrary to help them streamilne their purchasing process. The contract specifies that Edmond Ubrary will pay ABC $50,000 in the form of a fixed fee plus an additional $20,000 if the library achleves $200,000 in cost savings. ABC estimates a 55% chance that the library will achleve a $200,000 savings. Assuming ABC estimates that the transaction price is the expected value transaction price. The transaction price is recorded as
a. $50,000
$61,000
c. $70,000
d. $75,000
Questions 2,3 and 4
Zhang Corporation enters a contract with Warner Video to add their programs to Zhang's network, Warner will pay Zhang an upfront flixed fee of $250,000 for 12 months of access and will also pay a $100,000 bonus if Zhang's users access Warner Video for at least 10,000 hours during the 12-month period. Thang estimates that it has a 70% chance of earning the $100,000 bonus.
2. Refer to Zhang Corporation. Using the expected-value approach the transaction price would be
a. $200,000EV=100,000.70=70,000
b. $250,000
(c)5320,009TP=250,000+70,000=320,000
8. $350,000
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