Midterm Comm293
Sauder School of Business COMM 293 Midterm Examination Question Booklet
Answer all questions in the other (answer) booklet, this booklet WILL NOT BE REVIEWED FOR GRADING PURPOSES
Time: 110 minutes Total Marks: 100
No programmable calculators are permitted. Please show all calculations in an orderly and clear format for part marks. Time management is crucial. Be sure to attempt each question. No questions will be permitted during this examination. If you need to make an assumption, state it and continue. Read the questions carefully before making any assumptions. Question 1 (18 marks; suggested time 18 minutes) Revenue Recognition
Part A Brigante Construction Ltd. entered into a contract on October 1, 2002 with the province of British Columbia to construct a multi-unit residential complex in Whistler. The contract price is fixed at $500 million and Brigante expects that the project will be complete by the end of 2005. Other information re: the contract is provided below. Brigante has a December 31st year-end. In $ millions Costs incurred (during the year) Estimated costs to complete at the end of the year 2002 $ 80 320 2003 $ 125 235 2004 $ 140 130 2005 $ 75 0
Required: (a) Determine the amount of revenue and gross profit that Brigante would record in each of the four years using the Completed Contract method. (4 marks) (b) Determine the amount of revenue and gross profit that Brigante would record in each of the four years using the Percentage of Completion method. Please round to the nearest million. (10 marks) Part B Costless Ltd. is a nationwide wholesaler who sells directly to consumers through its warehouse stores. While customers generally pay cash at the time of sale for most purchases, Costless sells some of its more expensive items (e.g., televisions) on “layaway”. Under a layaway arrangement, an individual contractually agrees to make a down payment equal to 20% of the purchase price. The customer then pays the remaining 80% two months later.
Answer all questions in the other (answer) booklet, this booklet WILL NOT BE REVIEWED FOR GRADING PURPOSES
Time: 110 minutes Total Marks: 100
No programmable calculators are permitted. Please show all calculations in an orderly and clear format for part marks. Time management is crucial. Be sure to attempt each question. No questions will be permitted during this examination. If you need to make an assumption, state it and continue. Read the questions carefully before making any assumptions. Question 1 (18 marks; suggested time 18 minutes) Revenue Recognition
Part A Brigante Construction Ltd. entered into a contract on October 1, 2002 with the province of British Columbia to construct a multi-unit residential complex in Whistler. The contract price is fixed at $500 million and Brigante expects that the project will be complete by the end of 2005. Other information re: the contract is provided below. Brigante has a December 31st year-end. In $ millions Costs incurred (during the year) Estimated costs to complete at the end of the year 2002 $ 80 320 2003 $ 125 235 2004 $ 140 130 2005 $ 75 0
Required: (a) Determine the amount of revenue and gross profit that Brigante would record in each of the four years using the Completed Contract method. (4 marks) (b) Determine the amount of revenue and gross profit that Brigante would record in each of the four years using the Percentage of Completion method. Please round to the nearest million. (10 marks) Part B Costless Ltd. is a nationwide wholesaler who sells directly to consumers through its warehouse stores. While customers generally pay cash at the time of sale for most purchases, Costless sells some of its more expensive items (e.g., televisions) on “layaway”. Under a layaway arrangement, an individual contractually agrees to make a down payment equal to 20% of the purchase price. The customer then pays the remaining 80% two months later.