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Question 1 of 7 - 1 TreeHold Corp. designs and builds custom harvesting equipment for logging companies across Canada. The company, which is publicly traded,
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TreeHold Corp. designs and builds custom harvesting equipment for logging companies across Canada. The company, which is publicly traded, has a May year end. On February TreeHold signed a contract with Coastal Harvesting Ltd to design and build custom harvesters that can harvest wood at the steep grades found along much of the Pacific coast timber stands included in Coastal's harvesting leases. The following events took place in in relation to the contract:
February : Officials from TreeHold and Coastal sign the contract. The contract was for $ TreeHold is to design, manufacture, and deliver the machines to Coastal's operations centre in Duncan, British Columbia. TreeHold's management estimates that the design component of the contract would be valued at $ if contracted for separately, while the machine construction component of the contract would be valued at $ if the machines were purchased separately. TreeHold agrees to provide a threeyear assurancetype warranty for the machines, and the company's management estimates that the warranty claims would total $ based on past experience. Coastal agrees to pay a $ deposit within days of signing the contract and to pay the balance within days of the equipment being delivered.
February : Coastal pays the deposit specified in the contract.
March : TreeHold's engineering staff complete the equipment design and it is approved by offcials from Coastal.
May : TreeHold completes construction of the harvesters.
May : The harvesters are loaded onto TreeHold's trucks and are delivered to Coastal's operation centre in Duncan later that day.
June : Coastal pays the balance owing on the contract.
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