Topic: GradientsGeneral Direction: Solve using Given-Required-Solution format. DO NOT USE EXCEL. Provide a Cash Flow Diagram (CFD). 5. A five-star hotel decided to enter a long-term contract with an HVAC maintenance company. TheHVAC maintenance company offers a starting price of P750,000 payable every end of the year forthirty years, with an annual increase of P25,000. The hotel wanted a uniform annual paymentinstead and asked the maintenance company to revise the contract prior to signing. What uniformannual payment does the maintenance company need to offer in the revised contract so that thepresent worth is the same as with the first offer? Assume 10% annual interest rate.6. A company initially planned to slash their annual thanksgiving party spending from P75,000 toP40,000 held every year-end for ten years to increase their net profit. The CEO however changedhis mind and decided to reduce the spending gradually over the course of ten years instead. Ifthe approved yearly deductions follow a geometric gradient series, what is the yearly rate ofdeduction so that its present worth is the same as the present worth of the initial deduction plan.Annual interest rate is 5%. Uniform Arithmetic GradientKey words: increase or decrease by a uniform amount each periodAscending arithmetic progressionP = PA + PGG[(1+ i)" – 1PGi1i|(1+ i)"|[1-(1+i)¯PA = AiGeometric GradientKey words: increase / decrease by percentageInstead of fixed valueP = A[1 - (1+ g/1+i)"]i-gwhere: P= Present of all cash flow between periods 1 and nA = Cash flow in period 1g= rate of change per periodi= effective interest rate per period

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5. A five-star hotel decided to enter a long-term contract with an HVAC maintenance company. The HVAC maintenance company offers a starting price of P750,000 payable every end of the year for thirty years, with an annual increase of P25,000. The hotel wanted a uniform annual payment instead and asked the maintenance company to revise the contract prior to signing. What uniform annual payment does the maintenance company need to offer in the revised contract so that the present worth is the same as with the first offer? Assume 10% annual interest rate.

5. A five-star hotel decided to enter a long-term contract with an HVAC maintenance company. The HVAC maintenance company offers a starting price of P750,000 payable every end of the year for thirty years, with an annual increase of P25,000. The hotel wanted a uniform annual payment instead and asked the maintenance company to revise the contract prior to signing. What uniform annual payment does the maintenance company need to offer in the revised contract so that the present worth is the same as with the first offer? Assume 10% annual interest rate.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 2RE: Yankee Corp. agrees to provide Albany Company 24 months of coaching services. The contract sets the...

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Yankee Corp. agrees to provide Albany Company 24 months of coaching services. The contract sets the price at 4,000 per month, which is the normal stand-alone price that Yankee charges. After 16 months, Yankee and Albany agree to modify the contract. Yankee reduces the fee for the 8 remaining months to 3,800 per month, and Albany agrees to a 24-month extension at a cost of 3,600 per month. At the time that the contract is modified, Yankee is charging other customers 3,750 per month for the coaching service. Should Yankee and Albany treat the modification as a separate contract?
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Since 1970, Super Rise, Incorporated, has provided maintenance services for elevators. On January 1, 2024, Super Rise obtains a contract to maintain an elevator in a 90-story building in New York City for 10 months and receives a fixed payment of $98,000. The contract specifies that Super Rise will receive an additional $49,000 at the end of the 10 months if there is no unexpected delay, stoppage, or accident during the year. Super Rise estimates variable consideration to be the most likely amount it will receive. Required: Assume that, because the building sees a constant flux of people throughout the day, Super Rise is allowed to access the elevators and related mechanical equipment only between 3 a.m. and 5 a.m. on any given day, which is insufficient to perform some of the more time-consuming repair work. As a result, Super Rise believes that unexpected delays are likely and that it will not earn the bonus. Prepare the journal entry Super Rise would record on January 1. Assume…
Since 1970, Super Rise, Inc., has provided maintenance services for elevators. On January 1, 2021, Super Rise obtains a contract to maintain an elevator in a 90-story building in New York City for 10 months and receives a fixed payment of $84,000. The contract specifies that Super Rise will receive an additional $42,000 at the end of the 10 months if there is no unexpected delay, stoppage, or accident during the year. Super Rise estimates variable consideration to be the most likely amount it will receive. Required:1. Assume that, because the building sees a constant flux of people throughout the day, Super Rise is allowed to access the elevators and related mechanical equipment only between 3 a.m. and 5 a.m. on any given day, which is insufficient to perform some of the more time-consuming repair work. As a result, Super Rise believes that unexpected delays are likely and that it will not earn the bonus. Prepare the journal entry Super Rise would record on January 1.2. Assume instead…
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