Strawberry entered into a contract to construct a building for a customer on 1 April 2019. The contract value is $100 million and the developer plans to complete the construction within 24 months. The contract has very strict conditions and if the construction is not completed on time, the Strawberry will have to pay a fine of 10% for each month of delay.

In the first year of construction to 31 March 2020 the situation was as follows:

a) It is expected that building will be completed on time;

b) Costs incurred to date were amounted to $30 million;

c) The further costs to completion were estimated with reasonable accuracy to be $32 million;

d) The value of $53 million was reflected in the certificates of work completed have been issued;

e) In assessment of progress Strawberry uses an output method.

Question 16 (2 points)

How Strawberry should recognize revenue from contract with customer for the year ended 31 March 2020?

Question 17 (2 points)

Show amounts recognized as revenue and costs incurred and the profit resulting from the contract for the year ended 31 March 2020 providing an extract from the Strawberrys Statement of profit or loss

Question 18 (2 points)

Which ONE of the following criteria does not reflect an obligation satisfied over time in accordance with IFRS 15?

a) The customer simultaneously receives and consumes the benefits as the performance takes place

b) The obligation performance creates or enhances an asset that the customer controls as the asset is created or enhanced

c) The performance obligation is arranging for goods/services to be provided by another party

d) The entitys performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date

Question 19 (2 points)

Assuming that customer has paid $20 million of the total $45 million invoiced by Strawberry for the year ended 31 March 2020 please record journal entries related to these amounts and provide extract from the Strawberrys Statement of financial position at 31 March 2020

Question 20 (2 points)

Please comment on assumption, how the situation with a delay by one month can affect the recognition of revenue if the company cannot complete the construction on time