QUESTION 42 Estimating variable consideration — performance bonus with multiple outcomes Contractor enters into a contract with Widget Inc to build an asset for $100,000 with a performance bonus of $ 50,000 that will be paid based on the timing of completion. The amount of the performance bonus decreases by 10% per week for every week beyond the agreed-upon completion date. The contract requirements are similar to contracts Contractor has performed previously, and management believes that such experience is predictive for this contract. Contractor concludes that the expected value method is most predictive in this case. Contractor estimates that there is a 60% probability that the contract will be completed by the agreed-upon completion date, a 30% probability that it will be completed one week late, and a 10% probability that it will be completed two weeks late. How should Contractor determine the transaction price?