FREE Trial

KLB Inc. makes satellite phones for the military that incorporate complex software. The companys most recent annual

Question:

KLB Inc. makes satellite phones for the military that incorporate complex software. The company’s most recent annual report included the following statement about its revenue recognition policy: Amounts allocated to the delivered hardware and the related essential software are recognized at the time of sale. Amounts allocated to the software upgrade rights are deferred and recognized on a straight-line basis over the 24-month estimated life of the related hardware. At the end of the first quarter of the current fiscal year, KLB released SatCom X, a new satellite phone. KLB has decided that the fair value of the “software upgrade rights” for the SatCom X amounts to 25 percent of its sales price. Assume that the military purchased $160 thousand of SatCom X units in the first quarter, $608 thousand in the second quarter, and $512 thousand in both the third and fourth quarters. 

Part A. How much sales revenue for the SatCom X did KLB recognize in the second quarter? For simplicity, assume that military rules require all purchases of the phone to occur at the end of the last day of each quarter. 

Part B. How much sales revenue did KLB recognize for the SatCom X in the fourth quarter? 

Part C. By how much did sales of the SatCom X increase the balance of the unearned revenue account as of the end of the year?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 64% (17 reviews)

KLB Inc Multiple Deliverables and Unearned Revenue Part A The portion of Q1 sales that is deferred a...View the full answer


answer-question
Answered By
tutor-profile-image
Mary Boke
As an online tutor with over seven years of experience and a PhD in Education, I have had the opportunity to work with a wide range of students from diverse backgrounds. My experience in education has allowed me to develop a deep understanding of how students learn and the various approaches that can be used to facilitate their learning. I believe in creating a positive and inclusive learning environment that encourages students to ask questions and engage with the material. I work closely with my students to understand their individual learning styles, strengths, and challenges to tailor my approach accordingly. I also place a strong emphasis on building strong relationships with my students, which fosters trust and creates a supportive learning environment. Overall, my goal as an online tutor is to help students achieve their academic goals and develop a lifelong love of learning. I believe that education is a transformative experience that has the power to change lives, and I am committed to helping my students realize their full potential.
5.00+ 4+ Reviews 21+ Question Solved
Related Book For  answer-question
International Accounting

International Accounting

ISBN: 978-1260466539

5th edition

Authors: Timothy Doupnik, Mark Finn, Giorgio Gotti, Hector Perera

See More Books
Question Posted:
See More Questions

Related Video

Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. It can be thought of as a \"prepayment\" for goods or services that a person or company is expected to supply to the purchaser at a later date. As a result of this prepayment, the seller has a liability equal to the revenue earned until the good or service is delivered. This liability is noted under current liabilities, as it is expected to be settled within a year.

Students also viewed these Business questions

Financial Accounting with IFRS Fold Out Primer 5th edition - ISBN: 978-0077408770 - Free Book