Answer:
The company promises to deliver upgrades for two years to a customer if they purchase software that costs $100. These upgrades need to be accounted for so they will be accounted for from the $100.
The $100 will therefore be split between the cost price of the software and the 2 year upgrades.
The part of the $100 that is the cost price will be recognized by the company as revenue immediately at the date of sale.
The upgrades however, will not. This is because you can only recognize revenue for services performed and these have not been performed yet. They will therefore be classified as Deferred revenue which is a liability account showing that the company owes people performance obligations.
As the years go by and the upgrades are given, the revenue will be recognized.
Answer:
A + B; C + G
Explanation:
Based on the scenario been described in the question, referring to exhibit 34-14, it is know that consumers surplus falls by area "A+B" and the important gain revenue equal to the area " C+G"
A code of conduct states the rules, values, rules, ethical principles and vision for your business. Stating a code of conduct in your business environment, and also tells workers what they are expected to do and the standards expectation of their work.
Answer:
The Scion xA EAC: -7,953.41
The Toyota Prius EAC: -8,043.16
Explanation:
<em>The equivalent cost is the PMT of the present worth of the asset,</em> so the first step to solve for EAC is to calculate the present worth:
<u>The Scion xA:</u>
Purchase 15,500
Present value of the cash flow needs:
C 1,500
time 3
rate 0.12
PV $3,602.7469
<u><em>Present worth: </em></u>15,500 + 3,602.75 = 19,102.75
<em>Now, we calcualte the PMT:</em>
PV 19,103
time 3
rate 0.12
C $ 7,953.410
<u>Toyota Prius:</u>
Purchase: 22,000
present value of annual OCF
C 800
time 4
rate 0.12
PV $2,429.8795
present worth: 24,429.88
Equivalent annual cost:
PV 24,430
time 4
rate 0.12
C: $ 8,043.158
C You always want to prepare