3 [30 MARKS | 45 MINUTES] Ratanang Projects (hereafter 'Ratanang') is a South African company originally founded in 1994 by, Mrs Matsile. Ratanang has a 30 April financial year end. Ratanangs services includes a full range of activities related to the development of turnkey projects - from foundation to roof level, as well as those activities relevant to the restoration and renovation of existing homes, commercial properties and public structures. Project Mohodi, Ga - Manthata On 2 January 2022 Ratanang signed a contract with the department of basic education to build a state-of-the-art secondary school in Mohodi, Ga-Manthata. According to the contract the R1 500 000 project has to be completed in the next 8 months, 2 August 2022. The rights and obligations for the contract have been clearly defined in the contract. The department of basic education made their first payment of R700 000 to Ratanang on 3 January 2022 to get the project up and running. The remaining amount of R800 000 will be paid in equal parts on 1 April 2022 and 1 June 2022 to Ratanang. The department of basic education has been a client of Ratanang for over 15 years and it never defaults on its payments. Polokwane Flats On 1 May 2021 Ratanang purchased a block of flats with 250 fully furnished bachelor apartments suitable for students in Polokwane. Ratanang obtained a loan of R150 000 000 from Nepo Bank to fund the purchase. The instalments on the loan amounts to R35 000 000 per annum for the first 5 years and R3 641 718 on the sixth year. The instalments will be paid on the last day of April annually, for 6 years in arrears at an interest rate of 6% per annum, compounded annually. The students pay a monthly rent of R5 500 per apartment. The block of flats had an 80% average occupancy per month for the year ended 30 April 2022. Six months after the purchase of the block of flats the management of Ratanang were very disappointed at the ROI (Return on investment) of the block of flats. This led to the sale of the entire block of flats on 1 November 2021 for R148 000 000. Given that the loan from Nepo bank was secured by the Sandton office park that Ratanang owns, Ratanang used the proceeds of the sale to invest in other business adventures. Ratanang has adopted the cost model as its accounting policy for measuring investment property. Investment property is depreciated over 15 years. The residual value is negligible. REQUIRED: a) MARKS Discuss in terms of step 1 of the 5 step revenue model (IFRS 15 Revenue [10] from contract with customers) whether a contract exists between Ratanang and the department of basic education. Communication skills: Logic and layout [2] b) Provide all the journal entries that should be processed to account for the Polokwane flats in the financial statements of Ratanang for the year ended 30 April 2022. [18] Please note: Dates and journal narrations are not required Total marks-Question 3 [30]