Terra Bus Transportation Provides On-Campus Bus Services for Universities

Terra 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, Terra will be paid $100,000 on the last day of each month. In addition, Terra 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, Terra 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 Terra abruptly left. As a result, Terra had to hire inexperienced drivers to fill the vacant positions. Consequently, Terra 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 Terra would be entitled to the semiannual bonus.

Terra bases estimates of variable consideration on the expected value it expects to receive.

-Prepare Terra's March 31 journal entry to record the revenue earned from March 1 - March 31, as well as any appropriate adjustments to the revenue presumed already recorded as earned from January 1 - February 28.

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In March, Terra's earns monthly service ...

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