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

question 63

Essay

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?

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Definitions:

Piagetian Characteristic

Pertaining to the developmental stages and theories of cognitive development introduced by Jean Piaget.

Critical Period

A specific time in an organism's development during which the presence or absence of certain experiences can have long-lasting effects on future development.

Sensitive Period

A time when a particular developmental growth is most likely to occur, although it may still happen later.