Question

Blair Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development. Blair will receive a payment of $10,000,000 if the drug receives regulatory approval. Based on prior experience in the drug-approval process, Blair determines it is 90% likely that the drug will gain approval and a 10% chance of denial. Determine the transaction price of the arrangement for Blair Biotech.

Answer 1

$10,000,000

Step-by-step explanation:

Data provided in the question

Amount received = $10,000,000

Gain approval percentage = 90%

Denial chance of percentage = 10%

So, the transaction price of the arrangement is $10,000,000 that reflects the received amount for providing the services to the customer.

So, only the $10,000,000 is come under the transaction price