Veras Bus Transportation Provides On-Campus Bus Services for Universities

question 254

Essay

Veras Bus Transportation provides on-campus bus services for universities. On January 1, it enters into a one-year contract with Moose University to operate five bus lines traveling throughout the campus. Under the contract, Veras will be paid $100,000 on the last day of each month. In addition, Veras will receive an additional $120,000 at the end of each six-month period, provided it remains free of accidents.

• On January 1, based on historical experience, Veras estimated that there is a 75% chance that it will remain free of accidents for the entire year.
• On March 20, three of the most senior drivers at Veras abruptly left. As a result, Veras had to hire inexperienced drivers to fill the vacant positions. Consequently, Veras revised its estimate to a 30% chance that it would earn the semiannual bonus.
• On June 30, Moose confirmed that there was no accident between January and June, so Veras would be entitled to the semiannual bonus.

Veras bases estimates of variable consideration on the most likely amount it expects to receive.

-Prepare Veras' January 31 journal entry to account for the revenue earned from January 1 - January 31.

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Definitions:

Unfair Die

A die that has been altered or designed in such a way that it does not have an equal chance of landing on each of its faces.

\(X^2\)

A symbol commonly representing the chi-squared statistic, used in statistical tests to evaluate the discrepancies between observed and expected frequencies.

Unfair Die

A dice that has been altered or designed to favor certain outcomes over others, deviating from a fair chance.

Uniformly Distributed

Describes a type of distribution where all outcomes are equally likely across the range of possible values.