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:

Administrator

A manager in a public or nonprofit organization.

Accountability

The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner.

Henry Mintzberg

A renowned management theorist known for his work on business strategy and organizational structures.

Managerial Roles

involve the functions and responsibilities assumed by managers in steering organizations toward their objectives.