Problem 1

Requirement 1
1 Prepare the allocation of the transaction price by applying IFRS 15 - Revenue fro

The allocation of the transaction price is as follows:

Performance Obligations
Construction Services
Operation Services
Road Resurfacing Services
Total

2 Compute the revenue to be recognized from Years 1 - 10.

Year Performance Obligation Satisfied Revenue

1 Construction Services 525.00
2 Construction Services 525.00
3 Operation Services 12.00
4 Operation Services 12.00
5 Operation Services 12.00
6 Operation Services 12.00
7 Operation Services 12.00
8 Operation Services + Road Resurfacing Service 122.00
9 Operation Services 12.00
10 Operation Services 12.00
Total 1,256.00

3 Determine the interest income over the term of the contract / arrangement.

Total collections from the grantor 1,600.00

Total Cash Selling Price 1,256.00
Interest Income over the term of the contract 344.00

4 Prepare amortization table for the amounts due from the grantor.

Date Collections
1/1/Year 1 -
12/31/Year 1 -
12/31/Year 2 -
12/31/Year 3 200.00
12/31/Year 4 200.00
12/31/Year 5 200.00
12/31/Year 6 200.00
 12/31/Year 7 200.00
12/31/Year 8 200.00
12/31/Year 9 200.00
12/31/Year 10 200.00
Total 1,600.00

5 Prepare amortization table for the loans payable of the operator.

Date Payments
1/1/Year 1 -
12/31/Year 1 -
12/31/Year 2 -
12/31/Year 3 200.00
12/31/Year 4 200.00
12/31/Year 5 200.00
12/31/Year 6 200.00
12/31/Year 7 200.00
12/31/Year 8 200.00
12/31/Year 9 200.00
12/31/Year 10 200.00

6 Prepare journal entries for Years 1 and 2

12/31/Year 1
Cash
Loans Payable

Contract Costs
Cash

Contract Asset
Contract Revenue

12/31/Year 2
Cash
Loans Payable

Interest Expense
Loans Payable

Contract Cost
Cash

Receivable
Contract Asset
Receivable
Contract Revenue

Receivable
Interest Revenue

7 Present the financial statements of the operator for Years 1-10.

Statement of Comprehensive Income

Year 1
Contract Revenue 525.00
Contract Costs (500.00)
Gross Profit 25.00

Interest Income -
Interest Expense -
Net Profit 25.00

Statement of Financial Position

Year 1
Amount Receivable from Grantor 525.00
Cash (Debt) (500.00)
Net Assets 25.00
ying IFRS 15 - Revenue from Contracts with Customers.

Allocations
1,050.00
96.00
110.00
1,256.00

ntract / arrangement.

he grantor.

Interest Income Amortization Revenue Amortized Cost

- - - -
- - 525.00 525.00
32.45 (32.45) 525.00 1,082.45
66.90 133.10 12.00 961.34
59.41 140.59 12.00 832.75
51.46 148.54 12.00 696.21
43.03 156.97 12.00 551.24
 34.07 165.93 12.00 397.31
24.55 175.45 122.00 343.86
21.25 178.75 12.00 177.11
10.95 189.05 12.00 0.06
344.06 1,255.94 1,256.00

e operator.

Interest Expense Amortization Contract Costs Amortized Cost

- - - -
- - 500.00 500.00
33.50 (33.50) 500.00 1,033.50
69.24 130.76 10.00 912.74
61.15 138.85 10.00 783.90
52.52 147.48 10.00 646.42
43.31 156.69 10.00 499.73
33.48 166.52 10.00 343.21
23.00 177.00 110.00 276.21
18.51 181.49 10.00 104.71
7.02 192.98 10.00 (78.27)

500.00
500.00

500.00
500.00

525.00
525.00

500.00
500.00

33.50
33.50

500.00
500.00

525.00
525.00
 525.00
525.00

32.45
32.45

ears 1-10.

Year 2 Year 3 Year 4 Year 5 Year 6

525.00 12.00 12.00 12.00 12.00
(500.00) (10.00) (10.00) (10.00) (10.00)
25.00 2.00 2.00 2.00 2.00

32.45 66.90 59.41 51.46 43.03

(33.50) (69.24) (61.15) (52.52) (43.31)
23.95 (0.35) 0.26 0.94 1.72

Year 2 Year 3 Year 4 Year 5 Year 6

1,082.45 961.34 832.75 696.21 551.24
(1,033.50) (912.74) (783.90) (646.42) (499.73)
48.95 48.60 48.85 49.80 51.51
Year 7 Year 8 Year 9 Year 10 Total
12.00 122.00 12.00 12.00 1,256.00
(10.00) (110.00) (10.00) (10.00) (1,180.00)
2.00 12.00 2.00 2.00 76.00

34.07 24.55 21.25 10.95 344.06

(33.48) (23.00) (18.51) (7.02) (341.73)
2.58 13.56 4.74 5.93 78.33

Year 7 Year 8 Year 9 Year 10

397.31 343.86 177.11 0.06
(343.21) (276.21) (104.71) 78.27
54.10 67.65 72.40 78.33
Problem 2

Requirement 1
1 Determine the revenue from construction services to be recognized in Years 1 an
Construction services in Year 1
Construction services in Year 2
Revenue from construction services

2 Determine the fair value of the intangible asset at the end of Year 2.
Construction services in Year 1
Construction services in Year 2
Capitalizable borrowing costs
Intangible Asset at the end of Year 2

3 Prepare a schedule showing revenues computed for Years 1-10.

Year Type of Services Revenue
1 Construction Services 525.00
2 Construction Services 525.00
3 Operation Services 200.00
4 Operation Services 200.00
5 Operation Services 200.00
6 Operation Services 200.00
7 Operation Services 200.00
8 Operation Services + Resurfacing Services 200.00
9 Operation Services 200.00
10 Operation Services 200.00
Total 2,650.00

Prepare amortization table for the loans payable of the operator.

Date Payments
1/1/Year 1 -
12/31/Year 1 -
12/31/Year 2 -
12/31/Year 3 200.00
12/31/Year 4 200.00
12/31/Year 5 200.00
12/31/Year 6 200.00
12/31/Year 7 200.00
12/31/Year 8 200.00
12/31/Year 9 200.00
12/31/Year 10 200.00
 4 Prepare a schedule showing the operator's estimate of the resurfacing obligation

Schedule of Operator's Resurfacing Obligation

Year 3
Obligations arising in Year (discounted at 6.7%) 12.29
Increase in obligation due to passage of time -
Resurfacing expense per year 12.29
Resurfacing obligation at each year - end 12.29

5 Present the financial statements of the operator for Years 1-10.

Statement of Comprehensive Income

Year 1
Contract Revenue 525.00
Amortization Expense -
Interest Expense -
Resurfacing expense -
Other Contract Costs (500.00)
Net Profit 25.00

Statement of Financial Position

Year 1
Intangible Asset 525.00
Cash (Debt) (500.00)
Resurfacing Obligation -
Net Assets 25.00
recognized in Years 1 and 2.
525.00
525.00
1,050.00

d of Year 2.
525.00
525.00
33.50
1,083.50

Interest Expense Amortization Contract Costs Amortized Cost

- - - -
- - 500.00 500.00
33.50 (33.50) 500.00 1,033.50
69.24 130.76 10.00 912.74
61.15 138.85 10.00 783.90
52.52 147.48 10.00 646.42
43.31 156.69 10.00 499.73
33.48 166.52 10.00 343.21
23.00 177.00 110.00 276.21
18.51 181.49 10.00 104.71
7.02 192.98 10.00 (78.27)
he resurfacing obligation

Year 4 Year 5 Year 6 Year 7 Year 8

12.29 13.12 13.99 14.93 15.93
0.82 0.88 0.94 1.00 1.07
13.12 13.99 14.93 15.93 17.00
25.41 39.40 54.33 70.27 -

Year 2 Year 3 Year 4 Year 5 Year 6

525.00 200.00 200.00 200.00 200.00
- (135.44) (135.44) (135.44) (135.44)
- (69.24) (61.15) (52.52) (43.31)
- (12.29) (13.12) (13.99) (14.93)
(500.00) (10.00) (10.00) (10.00) (10.00)
25.00 (26.97) (19.71) (11.95) (3.68)

Year 2 Year 3 Year 4 Year 5 Year 6

1,083.50 948.06 812.63 677.19 541.75
(1,033.50) (912.74) (783.90) (646.42) (499.73)
- (12.29) (25.41) (39.40) (54.33)
50.00 23.03 3.32 (8.63) (12.31)
Total

Year 7 Year 8 Year 9 Year 10 Total

200.00 200.00 200.00 200.00 2,650.00
(135.44) (135.44) (135.44) (135.44) (1,083.50)
(33.48) (23.00) (18.51) (7.02) (308.23)
(15.93) (17.00) - - (87.27)
(10.00) (110.00) (10.00) (10.00) (1,180.00)
5.15 (85.43) 36.06 47.55 (9.00)

Year 7 Year 8 Year 9 Year 10

406.31 270.88 135.44 -
(343.21) (276.21) (104.71) 78.27
(70.27) - - -
(7.17) (5.33) 30.72 78.27