On April 1st, Bob the builder entered into a contract of one-month duration to build a barn for Nolan. Bob is guaranteed to receive a base fee of $4900 for his services in addition to a bonus depending on when the project is completed. Nolan createdincentives for Bob to finish the barn as soon as he can without jeopardizing the structural integrity of the barn. Nolan offered to pay an additional 25% of the base fee if the project finished 2 weeks early and 10% if the project finished a week early. The probability of finishing 2 weeks early is 20% and the probability to finishing a week earlu is 60%.
a) What is the expected transaction price with variable consideration estimated as the expected value?
b) What is the expected transaction price with variable consideration as the most likely amount?
Please show procedures and calculations.