QUESTION 12.

7 (Suggested solution)
PART A

Revenue from contracts with customers

Construction income 5 000 000 4 000 000 / 8 000 000 * 10 000 000
Sale of flat 678 323 450 000 + R228 323

Other income
Commission 850 000 8 500 000 * 10%

Financing income 34 248 R228 323 * 15%

Trade discount 0

Present value (PV):

15 I/YR
1 P/YR
3 N
R100 000 PMT

PV? R228 323

Full PV: 450 000 + 228 323 = 678 323

Or

Discounting by calculator:
15 I/YR
1 P/YR
R450 000 CFj (0)
R100 000 CFj (1)
R100 000 CFj (2)
R100 000 CFj (3)

NPV R678 323

PART B

a) Lay out of gardens: 20 houses, block of flats, entrance

Garden services: 20 houses, block of flats, entrance

b)

Performance obligations Method

Gardens of 20 houses 20 x 25 000 500 000 Market
assessment
Garden of block of 60 000 x 125/100 75 000 Cost + profit
flats
Garden at entrance 15 000 Residual value
Total 590 000
c) Dr Contract asset 265 000
Dr Debtor 10 500
Cr Revenue 275 500
(Recognition of revenue)

Calculation:
Lay out: Houses 10 x 25 000 250 000
Lay out: Block of flats -
Lay out: Entrance 15 000
Garden services: Houses 6 000 x 10 x 2/12 10 000
Garden services: Block of -
flats
Garden services: Entrance 2 000 x 3/12 500

Total 275 500