Question
Megrew Building Company is developing a multi-unit residential building complex in downtown Montreal. Rick Cho enters into a binding sales contract with Megrew for a
Megrew Building Company is developing a multi-unit residential building complex in downtown Montreal. Rick Cho enters into a binding sales contract with Megrew for a specified apartment unit that is under construction. Each apartment is of a similar size and has a similar floor plan, but other characteristics of the units, such as the location within the complex, are different.
Scenario 1.
Rick Cho pays a deposit of $50,000 that is refundable only if Megrew fails to complete construction of the unit in accordance with the contract. The remainder of the contract price of $450,000 is payable on completion of the contract when Cho obtains physical possession of the unit. If Cho defaults on the contract before completion of the unit, Megrew has only the right to retain the deposit.
Scenario 2.
Rick Cho pays a $50,000 non-refundable deposit upon entering into the contract and will make four progress payments during construction of the unit. The contract includes the following other terms:
Megrew is precluded from being able to transfer the unit to another customer.
Cho does not have the right to terminate the contract unless Megrew fails to perform as promised.
If Cho defaults on its obligations by failing to make the promised progress payments, Megrew would have a right to all of the consideration promised in the contract if it completes the construction of the unit.
Requirement
For each scenario, determine whether the performance obligation is satisfied over time or at a point in time
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