Lily Company Signed a Contract to Produce Their One-Of-A-Kind Toy

Multiple Choice

Lily Company signed a contract to produce their one-of-a-kind toy flowers for Han Company. Lily Company was to receive $100,000 upon filling the obligation to produce 1,000 toy flowers. The cost of a certain rare-metal rose 200 percent just after the contract was signed. The unexpected rise in the metal meant that Lily Company would lose $30,000 on the contract. The Contract included a nonfulfillment penalty of $10,000. At what amount should Lily Company recognize for the provision?

A) $30,000
B) $130,000
C) $10,000
D) none of the above