LMZ Computer Systems Inc. maintains office equipment under contract. The contracts are for labour only; customers must reimburse LMZ for parts. LMZ's rate schedule follows:
$$\begin{array} { | l | l | l | l | }
\hline & \text { One year } & \text { Two years } & \text { Three years } \
\hline \text { Photocopies } & \$ 220 & 400 & 620 \
\hline \text { Fax machine } & \$ 175 & 340 & 440 \
\hline
\end{array}$$ LMZ's 2018 sales of maintenance agreements is set out below:
$$\begin{array} { | l | l | l | l | }
\hline & \text { One year } & \text { Two years } & \text { Three years } \
\hline \text { Photocopies } & 20 & 12 & 30 \
\hline \text { Fax machine } & 24 & 20 & 30 \
\hline
\end{array}$$ Requirements:
Assuming that sales occurred evenly through the year:
a. What amount of revenue will LMZ recognize for the year ended December 31,2018?
b. What amount of deferred revenue will LMZ report as a current liability on December 31,2018?
c. What amount of deferred revenue will LMZ report as a non-current liability on December 31,2018?

Question

LMZ Computer Systems Inc. maintains office equipment under contract. The contracts are for labour only; customers must reimburse LMZ for parts. LMZ's rate schedule follows:
 $$\begin{array} { | l | l | l | l | } 
\hline & \text { One year } & \text { Two years } & \text { Three years } \
\hline \text { Photocopies } & \$ 220 & 400 & 620 \
\hline \text { Fax machine } & \$ 175 & 340 & 440 \
\hline
\end{array}$$ LMZ's 2018 sales of maintenance agreements is set out below:
 $$\begin{array} { | l | l | l | l | } 
\hline & \text { One year } & \text { Two years } & \text { Three years } \
\hline \text { Photocopies } & 20 & 12 & 30 \
\hline \text { Fax machine } & 24 & 20 & 30 \
\hline
\end{array}$$ Requirements:
Assuming that sales occurred evenly through the year:
a. What amount of revenue will LMZ recognize for the year ended December 31,2018?
b. What amount of deferred revenue will LMZ report as a current liability on December 31,2018?
c. What amount of deferred revenue will LMZ report as a non-current liability on December 31,2018?

Quizplus · Accepted Answer

The Answer of LMZ Computer Systems Inc. maintains office equipment under contract. The contracts are for labour only; customers must reimburse LMZ for parts. LMZ's rate schedule follows:
 $$\begin{array} { | l | l | l | l | } 
\hline & \text { One year } & \text { Two years } & \text { Three years } \
\hline \text { Photocopies } & \$ 220 & 400 & 620 \
\hline \text { Fax machine } & \$ 175 & 340 & 440 \
\hline
\end{array}$$ LMZ's 2018 sales of maintenance agreements is set out below:
 $$\begin{array} { | l | l | l | l | } 
\hline & \text { One year } & \text { Two years } & \text { Three years } \
\hline \text { Photocopies } & 20 & 12 & 30 \
\hline \text { Fax machine } & 24 & 20 & 30 \
\hline
\end{array}$$ Requirements:
Assuming that sales occurred evenly through the year:
a. What amount of revenue will LMZ recognize for the year ended December 31,2018?
b. What amount of deferred revenue will LMZ report as a current liability on December 31,2018?
c. What amount of deferred revenue will LMZ report as a non-current liability on December 31,2018?

LMZ Computer Systems Inc LMZ's 2018 Sales of Maintenance Agreements Is Set Out Below