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11. How many performance obligations are there in the contract? a. one b. two C. three d. four 12. What is the nature of the consideration in the contract? a. financial asset b. intangible asset c. partly financial asset and partly intangible asset d. property, plant and equipment 13. How much service revenue is recognized in Year 2? а. 60 b. 80 С. 28 d. 0

11. How many performance obligations are there in the contract? a. one b. two C. three d. four 12. What is the nature of the consideration in the contract? a. financial asset b. intangible asset c. partly financial asset and partly intangible asset d. property, plant and equipment 13. How much service revenue is recognized in Year 2? а. 60 b. 80 С. 28 d. 0

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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For Questions 11-16 Oyeman and Tipay Co. (OTC), a private entity, enters into a service concession arrangement. The terms of the agreement require OTC to: Construct an underground railway system – completing construction within two years; Maintain and operate the railway for 8 years after the completion; Recondition the railway at the end of the 9th year; and Turnover the railway to the government at the end of the 10th year. As consideration, the government pays the operator P80M per year in Years 3 to 10. OTC makes the following estimates at contract inception: Year Contract costs Stand-alone selling price Construction services 1 50 Forecast cost + 20% 2 50 Forecast cost + 20% Operation services 3-10 20 Forecast cost + 40%
Transcribed Image Text:For Questions 11-16 Oyeman and Tipay Co. (OTC), a private entity, enters into a service concession arrangement. The terms of the agreement require OTC to: Construct an underground railway system – completing construction within two years; Maintain and operate the railway for 8 years after the completion; Recondition the railway at the end of the 9th year; and Turnover the railway to the government at the end of the 10th year. As consideration, the government pays the operator P80M per year in Years 3 to 10. OTC makes the following estimates at contract inception: Year Contract costs Stand-alone selling price Construction services 1 50 Forecast cost + 20% 2 50 Forecast cost + 20% Operation services 3-10 20 Forecast cost + 40%
Reconditioning 10 Forecast cost + 10% All cash flows are assumed to take place at the end of the year. OTC determines that the implied interest rate in the contract is 33.05%. 11. How many performance obligations are there in the contract? a. one b. two three d. four C. 12. What is the nature of the consideration in the contract? a. financial asset b. intangible asset partly financial asset and partly intangible asset d. C. property, plant and equipment 13. How much service revenue is recognized in Year 2? а. 60 b. 80 С. 28 d. 0
Transcribed Image Text:Reconditioning 10 Forecast cost + 10% All cash flows are assumed to take place at the end of the year. OTC determines that the implied interest rate in the contract is 33.05%. 11. How many performance obligations are there in the contract? a. one b. two three d. four C. 12. What is the nature of the consideration in the contract? a. financial asset b. intangible asset partly financial asset and partly intangible asset d. C. property, plant and equipment 13. How much service revenue is recognized in Year 2? а. 60 b. 80 С. 28 d. 0
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