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3)
In May 20X2, the city council of Oshawa, Ontario awarded a $7.6 million contract to Build-It Corp. (BIC)
to construct a new community centre in the city. The contract included a clause that provided for an
early completion bonus if BIC finished the project at least one month before the scheduled completion
date of October 31, 20X3. The bonus completion schedule, together with BIC's senior management's
estimates as to the probability of finishing by the specified dates, follows:
Project completion
Bonus Payment
Estimated probability
date
Prior to July 31,20x3
400,000
10%
Between augus 1 and
300,000
20%
31,20x3
Between September 1
200,000
40%
and 30,20x3
October 1,20x3 or later |0
30%
BIC's year end is December 31. It reports its financial results in accordance with IFRS and uses the most
likely amount to estimate variable consideration. What is the transaction price that should be used to
recognize revenue for this contract?
a) $7,600,000 b) $7,680,000 c) $7,780,000 d) $7,800,000

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