QUESTION 1 (53 marks) Cape Climate (Pty) Ltd is a company based in Cape Town that supplies residential and commercial air conditioners. The company has a June financial year-end. During the current financial year-end, Cape Climate (Ply) Ltd entered into a contract with a local restaurant franchise, called Pizza Perfect, to supply, install and maintain the air conditioners in all their restaurants across Cape Town. The terms of the contract are as follows: - Pizza Perfect will place a non-cancellable order for 90 air-conditioning units with Cape Climate (Pty) Ltd on 1 April 2023. - Cape Climate (Pty) Lid will acquire each unit from their supplier at an amount of R7 500 per unit and deliver them to the Pizza Perfect stores on 30 June 2023. Each unit will be supplied at an amount of R16 000 . - The units will be fitted and installed at the Pizza Perfect stores on 3 July 2023. The initial fitting and installation, as well as the maintenance for the first 2 years will be provided at no additional charge to the Pizza Perfect stores. - Fitting and installation costs are supplied by a third-party supplier to the customer. The cost for fitting and installation is as follows: The initial fitting and installation are paid for on a cash basis by Cape Climate (Pty) Ltd to the technicians supplying the service on 3rd of July 2023. - Maintenance costs are supplied by a third-party supplier to the customer. The cost of maintenance is as follows: After a board meeting was held on 27th June 2023, it was noted that the supplier of the maintenance services will increase their costs by 2% per annum at the end of the 2023 financial year-end. Industry practice is to apply a 20% profit margin on similar fitting and installation and maintenance services, which Cape Climate (Pty) Ltd also implements. - The selling price of the contract will be settled in full on 31 December 2023. 95 HFAC232-1-JuL-Dec2023-FA2-TD-V2-13072023 3 of 8 omantwe asssumst? REQUIRED: 1.1) Identify the performance coligations wizin the contradt according to the 5-stec appreach in accordance wh IFRS 15 of the Intemational Financial Reporting Standands. (3) marks) 1.2) Discuss and calculate the tranaction price for the contract to sasply the aircondeioning units according to Step 3 of the 5 -step approach in accordance with IFRS 15 of the Intemational Finandal Reporting Standands. Note- Assume that the finanoing component relating to the maintenance contract, f acplicable. is not significant. (T6 maks) 1.3) Allocate the transaction price according to Steg 4 of the 5-step acproach in acoodance with IFRS 15 of the international Finanolal Reporting Standards. Note: The stand-alone seling prices of the performance obligations are determined using the residual approach. (12 mans) 1.4) Prepare all the general journal entries to acoount for the contract to supply the air-condtioning units in the reconds of Cape Climate (Pty) La for the 30 June 2023 and 30 June 2024 year-end in accordance with the IFRS 15 of the International Financisl Reporting Standards. Note: The general joumal entry relating to the maintenance contract for the June 2024 financial year end. should be provided for in 1 entry fe. maintenanse services for 12 moress should be recognised in one general joumal entry. No general joumal entres are required for the infial purchase of the air condsioning unis. Joumal dates are roquired. Journat nacrations ave not required. (22 mass) 96 Note: - Al amounts should be rounded to the nearest Rand. Show all calculations cleanly. - Your answer must comply with Imlemational Francial Reporting Seandards (IFRS) - Ignore and value-added tax and income tax implications