FRA $-$ PGP $27-$ Term V

Revenue Recognition $-$ Class Exercise

$1.$ Costco Corp. operates retail stores. To shop in a Costco Store, customers must pay a nonrefundable, annual membership fee in advance, using either cash or an American Express card. A customer purchases an annual membership from Costco for $\backslash (\backslash$$ $50\backslash ),$ a $20-$pack of paper towels for $\backslash (\backslash$$ $12\mathrm{.}85\backslash ),$ and four new tires for $\backslash (\backslash$$ $440\backslash ).$ The tire purchases include mounting and aligning by a Costco tire technician, plus alignment and tire rotation services for three years afterward. The customer pays with an American Express Card.

$2.$ Sula Wines processes grapes into champagne, which it bottles, corks, and then ages in underground caverns. During the aging process, the winemakers hand$-$turn the bottles a quarter rotation every few months; also, at fixed intervals, the winemakers release yeast gases to prevent unwanted fermentation. Assume that Sula contracts to sell champagne to a customer for Rs$.15$ million. Under the terms of the contract, Sula will store the champagne in its caverns and perform all necessary functions associated with the aging process. The selling price includes the costs of producing the champagne and providing services during the aging process. The customers pay Sula Rs$.7\mathrm{.}5$ million at the beginning of the aging and storage process and agrees to pay the remainder upon delivery of the champagne.

$3.$ Among other items, Apple, Inc. sells Mac computers to customers, who receive the physical computer $($possibly with software installed$).$ Customers also have access to post$-$delivery non$-$software services and the right to receive certain software upgrades if and when Apple develops them. Apple sells Macs for various prices, including one model for approximately Rs$\mathrm{.}85,000.$ Customers pay cash or with a credit card.

$4.$ Bombardier Incorporated is a Canadian manufacturer of aircraft and trains. In this industry the manufacturing process usually exceeds one year. Assume that Bombardier recently signed a $\backslash (\backslash$$ $2\backslash )$ billion contract to provide $25$ new high$-$speed trains to a customer in European Union. The customer paid a deposit of $\backslash (\backslash$$ $250\backslash )$ million and will pay the remainder in equal installments over the next four years.

$5.$ SK Media advertising obtained advertisement right for one day world cup cricket tournament to be held in May$/$June $2002$ for Rs$.250$ million.

By $31$st March $2002,$ they paid Rs$.150$ million to secure these advertisement rights. The balance Rs$.100$ million was paid in April $2002.$

By $31$st March $2002,$ they processed advertisement for $\backslash (70\backslash \%\backslash )$ of the available time for Rs$.350$ million. The advertisement for balance $30\backslash \%$ was procured in April $2002$ for Rs$.150$ million.

The advertiser paid the full amount while booking the advertisement. $\backslash (25\backslash \%\backslash )$ of the advertisement time is expected to be available in May $2002$ and balance $\backslash (75\backslash \%\backslash )$ in June $2002.$

Calculate the profit$/$loss for the month of April, May, June $2002.$