Xerox Corporation sells, leases, and repairs photocopying machines to business customers. When a customer acquires a photocopying

Question:

Xerox sells, leases, and repairs photocopying machines to business customers. When a customer acquires a photocopying machine, it usually makes monthly payments over a 3-year period. These payments provide the customer with the use of the machine, the financing benefit of not having to pay upfront, and maintenance and repair services.
During 2002, Xerox paid a $10 million fine to the SEC because it had overstated revenues by $6 billion. Xerox had been recording these transactions as sales on credit, rather than as rental agreements.
a. Assume that these photocopiers have a 3-year useful life and no . Xerox treated these transactions as if it sells machines, but allows its customers 3 years to pay for their purchases. How would this change Xerox's reported revenues change each year?
b. Did Xerox's total revenues over the combined three-year period differ depending on whether it recorded these transactions as leases or sales?
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