Sullivan Software Sells Packages of a Software Program and One

question 96

Multiple Choice

Sullivan Software sells packages of a software program and one year's worth of technical support for $500. Its packaging lists the $500 sales price as comprised of a software program at a price of $450 and technical support with a price of $100, with a $50 discount for the package deal. All of Sullivan's sales are for cash, and there are no returns. Sullivan sells the software program separately for $475 and offers a year of technical support separately for $75.
-Sullivan should recognize revenue for the two parts of the arrangement as follows:

• A) Recognize the entire $500 when the customer pays cash to buy the package.
• B) Recognize the portion of the $500 attributable to the software program when the customer pays cash to buy the package; defer the portion attributable to technical support and recognize over the support period.
• C) Defer the entire $500 and recognize over the support period.
• D) Recognize the entire $500 upon conclusion of the support period.

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Definitions:

Interest-Based Bargaining

A negotiation strategy focusing on the underlying interests and needs of the parties involved rather than fixed positions.

Traditional Bargaining

The conventional approach to labor negotiation where union and management representatives discuss terms and conditions of employment, focusing on wages and working conditions.

Nonunionized Workers

Employees who are not members of a labor union and therefore are not covered by collective bargaining agreements.

Unionized Workers

Employees who are members of a labor union, which represents their interests in negotiations with employers regarding wages, hours, and other working conditions.