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Successful Wishes corporation contracts with a customer tolicense and install payroll application software. In addition tothe software license. Successful Wishes Corporation will provideinstallation service as a part of this contract. The installationservice could be performed by other entities because SucessfulWishes does not customize the software How many performanceobligations exist in this contract?

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Beverley Smith
Beverley SmithLv2
28 Sep 2019

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Can you please provide me with the most accurate solution. Thisis my third time posting this question.

Ohio corporation contracts with a customer to license andinstall payroll application software. In addition to the softwarelicense. Ohio Corporation will provide installation service as apart of this contract. The installation service could be performedby other entities because Ohio does not customize the software Howmany performance obligations exist in this contract?

REVIEW QUESTIONS – Chapter 5

1. In federal courts, discovery requests may be directed to ____________.

a. Only parties to the lawsuit.

b. Only parties joined to the lawsuit, as approved by the court.

c. Parties and nonparties to the lawsuit.

d. None of the above.

2. Which of the following is not one of the four major types of discovery tools?

a. Requests for admissions.

b. Interrogatories.

c. Depositions.

d. All of the above are major types of discovery tools.

3. Which of the following statements is true regarding witness lists?

a. Their production does not require a discovery request.

b. Their production requires a subpoena.

c. Their production requires court approval.

d. None of the above.

4. Which of the following may not be commanded by a subpoena?

a. Testimony.

b. The production of documents.

c. Seizing of documents.

d. All of the above may be commanded by a subpoena.

5. High Quality Products Inc. files a suit against National Software Corporation. Mike is a witness for High Quality. Jim is a witness for National Software. High Quality may direct interrogatories to ____________.

a. National Software only.

b. Jim only.

c. National Software or Jim only.

d. National Software, Jim, or Mike.

e. None of the above.

6. In Ron’s suit against Second National Bank, the discovery phase would include all of the following except ____________.

a. Ron’s complaint.

b. Ron’s deposition.

c. Ron’s request for Second National’s admissions.

d. Second National’s replies to Ron’s interrogatories.

e. None of the above.

7. Home Appliances Inc. files suit against H.H. Jones Corporation over a contract between them. Before the trial starts, what can H.H. Jones obtain from Home Appliances?

a. Access to related documents in Home’s possession.

b. Accurate information about Home’s trade secrets.

c. An admission of truth of matters unrelated to the contract.

d. All of the above.

e. None of the above.

8. Abusive tactics are fostered by the court system because ____________.

a. Attorneys know that lawyers are given only one opportunity to comply with discovery requests.

b. Lawyers have an incentive to increase discovery costs as they can bill their clients for more hours worked.

c. No penalties exist whatsoever for using abusive tactics.

d. None of the above.

9. The FRCP allows each party up to 10 depositions ____________.

a. To be taken however the party sees fit.

b. To be computed discretely allowing for the fact that a witness’s deposition may be taken more than once.

c. To be calculated cumulatively for plaintiffs, defendants, and third-party defendants.

d. As long as they are taken in a one-year time span.

e. None of the above.

10. If a party refuses to answer an interrogatory, the opposing party may file a motion to compel an answer. A motion to compel an answer ____________.

a. Will be granted if the moving party shows the answer is necessary to prepare for trial.

b. May be denied if the question asked is subject to a timely and valid objection.

c. May be denied if the question asked is an invasion of privacy of the other party.

d. Will be granted if the opposing party does not file a motion to refuse to respond.

e. None of the above.

11. Tom worked for a messenger service owned by Dalton. While Tom was driving a Dalton-owned vehicle on business in Miami, he hit and injured Pedro, a pedestrian who resides in Alabama. Pedro brought a diversity action against Dalton in federal court in Florida on a theory of respondeat superior (principal-agent). Personal service was properly made, pursuant to FRCP 4(e)(2), on Dalton, a Florida resident. Dalton now wishes to implead Tom as a third-party defendant (if Dalton is held liable to Pedro, Dalton will be entitled to indemnity from Tom). Tom is a resident of Puerto Rico and lives in San Juan, a two-hour flight from Miami. Dalton caused a licensed process server to serve Tom personally at Tom’s home in San Juan. Assume that Florida has no longarm statute allowing state-court jurisdiction over any defendant who cannot be physically found with Florida. Does the Florida federal court have personal jurisdiction over Dalton’s third-party claim against Tom?

a. Yes, because Tom was a third-party defendant who was served within 100 miles of the federal courthouse.

b. No, because there is no Florida long-arm statute that would authorize state-court jurisdiction over Tom.

c. Yes, because service was properly made on Dalton within Florida, the state or district where the federal suit is pending.

d. Yes, because Pedro, Dalton, and Tom are all citizens of different states or districts.

e. None of the above

BTN 2-1 Refer to Apple’s financial statementsin Appendix A for the following questions.

Required

What amount of total liabilities does it report for each of thefiscal years ended September 28, 2013, and September 29, 2012?

What amount of total assets does it report for each of thefiscal years ended September 28, 2013, and September 29, 2012?

Compute its debt ratio for each of the fiscal years endedSeptember 28, 2013, and September 29, 2012. (Report ratio inpercent and round it to one decimal.)

BTN 3-1 Refer to Apple's financial statementsin Appendix A to answer the following.

Identify and write down the revenue recognition principle asexplained in the chapter.

Review Apple's footnotes (in Appendix A and/or from its 10-K onits website) to discover how it applies the revenue recognitionprinciple and when it recognizes revenue. Report what youdiscover.

What is Apple's profit margin for fiscal years ended September28, 2013, and September 29, 2012.

BTN 4-1 Refer to Apple's financial statementsin Appendix A to answer the following.

For the fiscal year ended September 28, 2013, what amount iscredited to Income Summary to summarize its revenues earned?

For the fiscal year ended September 28, 2013, what amount isdebited to Income Summary to summarize its expenses incurred?

For the fiscal year ended September 28, 2013, what is thebalance of its Income Summary account before it is closed?

Appendix A

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Page A-6

APPLE INC.
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation and Preparation

The Company's fiscal year is the 52- or 53-week period that endson the last Saturday of September. The Company's fiscal years 2013,2012 and 2011 ended on September 28, 2013, September 29, 2012 andSeptember 24, 2011, respectively. An additional week is included inthe first fiscal quarter approximately every six years to realignfiscal quarters with calendar quarters. Fiscal year 2012 spanned 53weeks, with a 14th week included in the first quarter of 2012.Fiscal years 2013 and 2011 spanned 52 weeks each. Unless otherwisestated, references to particular years, quarters, months andperiods refer to the Company's fiscal years ended in September andthe associated quarters, months and periods of those fiscalyears.

Revenue Recognition

Net sales consist primarily of revenue from the sale ofhardware, software, digital content and applications, peripherals,and service and support contracts. The Company recognizes revenuewhen persuasive evidence of an arrangement exists, delivery hasoccurred, the sales price is fixed or determinable, and collectionis probable. Product is considered delivered to the customer onceit has been shipped and title and risk of loss have beentransferred. For most of the Company's product sales, thesecriteria are met at the time the product is shipped. For onlinesales to individuals, for some sales to education customers in theU.S., and for certain other sales, the Company defers revenue untilthe customer receives the product because the Company retains aportion of the risk of loss on these sales during transit. TheCompany recognizes revenue from the sale of hardware products,software bundled with hardware that is essential to thefunctionality of the hardware, and third-party digital content soldon the iTunes Store in accordance with general revenue recognitionaccounting guidance. The Company recognizes revenue in accordancewith industry specific software accounting guidance for thefollowing types of sales transactions: (i) standalone sales ofsoftware products, (ii) sales of software upgrades and (iii) salesof software bundled with hardware not essential to thefunctionality of the hardware.

For the sale of most third-party products, the Companyrecognizes revenue based on the gross amount billed to customersbecause the Company establishes its own pricing for such products,retains related inventory risk for physical products, is theprimary obligor to the customer and assumes the credit risk foramounts billed to its customers. For third-party applications soldthrough the App Store and Mac App Store and certain digital contentsold through the iTunes Store, the Company does not determine theselling price of the products and is not the primary obligor to thecustomer. Therefore, the Company accounts for such sales on a netbasis by recognizing in net sales only the commission it retainsfrom each sale. The portion of the gross amount billed to customersthat is remitted by the Company to third-party app developers andcertain digital content owners is not reflected in the Company'sConsolidated Statements of Operations.

The Company records deferred revenue when it receives paymentsin advance of the delivery of products or the performance ofservices. This includes amounts that have been deferred forunspecified and specified software upgrade rights and non-softwareservices that are attached to hardware and software products. TheCompany sells gift cards redeemable at its retail and onlinestores, and also sells gift cards redeemable on the iTunes Storefor the purchase of digital content and software. The Companyrecords deferred revenue upon the sale of the card, which isrelieved upon redemption of the card by the customer. Revenue fromAppleCare service and support contracts is deferred and recognizedover the service coverage periods. AppleCare service and supportcontracts typically include extended phone support, repairservices, web-based support resources and diagnostic tools offeredunder the Company's standard limited warranty.

The Company records reductions to revenue for estimatedcommitments related to price protection and other customerincentive programs. For transactions involving price protection,the Company recognizes revenue net of the estimated amount to berefunded. For the Company's other customer incentive programs, theestimated cost of these programs is recognized at the later of thedate at which the Company has sold the product or the date at whichthe program is offered. The Company also records reductions torevenue for expected future product returns based on the Company'shistorical experience. Revenue is recorded net of taxes collectedfrom customers that are remitted to governmental authorities, withthe collected taxes recorded as current liabilities until remittedto the relevant government authority.

Shipping Costs

For all periods presented, amounts billed to customers relatedto shipping and handling are classified as revenue, and theCompany's shipping and handling costs are included in cost ofsales.

Warranty Expense

The Company generally provides for the estimated cost ofhardware and software warranties at the time the related revenue isrecognized. The Company assesses the adequacy of its pre-existingwarranty liabilities and adjusts the amounts as necessary based onactual experience and changes in future estimates.

Page A-7

Software Development Costs

Research and development costs are expensed as incurred.Development costs of computer software to be sold, leased, orotherwise marketed are subject to capitalization beginning when aproduct's technological feasibility has been established and endingwhen a product is available for general release to customers. Inmost instances, the Company's products are released soon aftertechnological feasibility has been established. Costs incurredsubsequent to achievement of technological feasibility were notsignificant, and software development costs were expensed asincurred during 2013, 2012 and 2011.

Advertising Costs

Advertising costs are expensed as incurred and included inselling, general and administrative expenses. Advertising expensewas $1.1 billion, $1.0 billion and $933 million for 2013, 2012 and2011, respectively.

Earnings Per Share

Basic earnings per share is computed by dividing incomeavailable to common shareholders by the weighted-average number ofshares of common stock outstanding during the period. Dilutedearnings per share is computed by dividing income available tocommon shareholders by the weighted-average number of shares ofcommon stock outstanding during the period increased to include thenumber of additional shares of common stock that would have beenoutstanding if the potentially dilutive securities had beenissued.

Cash Equivalents and Marketable Securities

All highly liquid investments with maturities of three months orless at the date of purchase are classified as cash equivalents.The Company's marketable debt and equity securities have beenclassified and accounted for as available-for-sale. Managementdetermines the appropriate classification of its investments at thetime of purchase and reevaluates the designations at each balancesheet date. The Company classifies its marketable debt securitiesas either short-term or long-term based on each instrument'sunderlying contractual maturity date. Marketable debt securitieswith maturities of 12 months or less are classified as short-termand marketable debt securities with maturities greater than 12months are classified as long-term. The Company classifies itsmarketable equity securities, including mutual funds, as eithershort-term or long-term based on the nature of each security andits availability for use in current operations. The Company'smarketable debt and equity securities are carried at fair value,with the unrealized gains and losses, net of taxes, reported as acomponent of shareholders' equity. The cost of securities sold isbased upon the specific identification method.

Accounts Receivable (Trade Receivables)

The Company has considerable trade receivables outstanding withits third-party cellular network carriers, wholesalers, retailers,value-added resellers, small and mid-sized businesses, andeducation, enterprise and government customers. The Company'scellular network carriers accounted for 68% and 66% of tradereceivables as of September 28, 2013 and September 29, 2012,respectively. The additions and write-offs to the Company'sallowance for doubtful accounts during 2013, 2012 and 2011 were notsignificant.

Allowance for Doubtful Accounts

The Company records its allowance for doubtful accounts basedupon its assessment of various factors. The Company considershistorical experience, the age of the accounts receivable balances,credit quality of the Company's customers, current economicconditions, and other factors that may affect customers' ability topay.

Inventories

Inventories are stated at the lower of cost, computed using thefirst-in, first-out method, or market. If the cost of theinventories exceeds their market value, provisions are madecurrently for the difference between the cost and the marketvalue.

D

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciationis computed by use of the straight-line method over the estimateduseful lives of the assets, which for buildings is the lesser of 30years or the remaining life of the underlying building; between twoto five years for machinery and equipment, including producttooling and manufacturing process equipment; and the shorter oflease terms or ten years for leasehold improvements. The Companycapitalizes eligible costs to acquire or develop internal-usesoftware that are incurred subsequent to the preliminary projectstage. Capitalized costs related to internal-use software areamortized using the straight-line method over the estimated usefullives of the assets, which range from three to five years.Depreciation and amortization expense on property and equipment was$5.8 billion, $2.6 billion and $1.6 billion during 2013, 2012 and2011, respectively.

D

Page A-8

Long-Lived Assets Including Goodwill and Other AcquiredIntangible Assets

The Company reviews property, plant and equipment, inventorycomponent prepayments, and certain identifiable intangibles,excluding goodwill, for impairment. Long-lived assets are reviewedfor impairment whenever events or changes in circumstances indicatethe carrying amount of an asset may not be recoverable.Recoverability of these assets is measured by comparison of theircarrying amounts to future undiscounted cash flows the assets areexpected to generate. If property, plant and equipment, inventorycomponent prepayments, and certain identifiable intangibles areconsidered to be impaired, the impairment to be recognized equalsthe amount by which the carrying value of the assets exceeds itsfair value. The Company did not record any significant impairmentsduring 2013, 2012 and 2011.

The Company does not amortize goodwill and intangible assetswith indefinite useful lives, rather such assets are required to betested for impairment at least annually or sooner whenever eventsor changes in circumstances indicate that the assets may beimpaired. The Company performs its goodwill and intangible assetimpairment tests in the fourth quarter of each year. The Companydid not recognize any impairment charges related to goodwill orindefinite lived intangible assets during 2013, 2012 and 2011. TheCompany established reporting units based on its current reportingstructure. For purposes of testing goodwill for impairment,goodwill has been allocated to these reporting units to the extentit relates to each reporting unit. In 2013 and 2012, the Company'sgoodwill was allocated to the Americas and Europe reportableoperating segments.

The Company amortizes its intangible assets with definite usefullives over their estimated useful lives and reviews these assetsfor impairment. The Company is currently amortizing its acquiredintangible assets with definite useful lives over periods typicallyfrom three to seven years.

Goodwill and Other Intangible Assets

The Company's acquired intangible assets with definite usefullives primarily consist of patents and licenses and are amortizedover periods typically from three to seven years. The followingtable summarizes the components of gross and net intangible assetbalances as of September 28, 2013 (in millions):

D

The Company's gross carrying amount of goodwill was $1.6 billionand $1.1 billion as of September 28, 2013 and September 29, 2012,respectively. The Company did not have any goodwill impairmentduring 2013, 2012 or 2011. Amortization expense related to acquiredintangible assets was $960 million, $605 million and $192 millionin 2013, 2012 and 2011, respectively.

Fair Value Measurements

The Company applies fair value accounting for all financialassets and liabilities and non-financial assets and liabilitiesthat are recognized or disclosed at fair value in the financialstatements on a recurring basis. The Company defines fair value asthe price that would be received from selling an asset or paid totransfer a liability in an orderly transaction between marketparticipants at the measurement date. When determining the fairvalue measurements for assets and liabilities, which are requiredto be recorded at fair value, the Company considers the principalor most advantageous market in which the Company would transact andthe market-based risk measurements or assumptions that marketparticipants would use in pricing the asset or liability, such asrisks inherent in valuation techniques, transfer restrictions andcredit risk. Fair value is estimated by applying the followinghierarchy, which prioritizes the inputs used to measure fair valueinto three levels and bases the categorization within the hierarchyupon the lowest level of input that is available and significant tothe fair value measurement:

Level 1—Quoted prices in active markets for identicalassets or liabilities.

Level 2—Observable inputs other than quoted prices inactive markets for identical assets and liabilities, quoted pricesfor identical or similar assets or liabilities in inactive markets,or other inputs that are observable or can be corroborated byobservable market data for substantially the full term of theassets or liabilities.

Level 3—Inputs that are generally unobservable andtypically reflect management's estimate of assumptions that marketparticipants would use in pricing the asset or liability.

The Company's valuation techniques used to measure the fairvalue of money market funds and certain marketable equitysecurities were derived from quoted prices in active markets foridentical assets or liabilities. The valuation techniques used tomeasure the fair value of all other financial instruments, all ofwhich have counterparties with high credit ratings, were valuedbased on quoted market prices or model driven valuations usingsignificant inputs derived from or corroborated by observablemarket data. In accordance with the fair value accountingrequirements, companies may choose to measure eligible financialinstruments and certain other items at fair value. The Company hasnot elected the fair value option for any eligible financialinstruments.

Page A-9

Accrued Warranty and Indemnification

The Company offers a basic limited parts and labor warranty onits hardware products. The basic warranty period for hardwareproducts is typically one year from the date of purchase by theend-user. The Company also offers a 90-day basic warranty for itsservice parts used to repair the Company's hardware products. TheCompany provides currently for the estimated cost that may beincurred under its basic limited product warranties at the timerelated revenue is recognized. Factors considered in determiningappropriate accruals for product warranty obligations include thesize of the installed base of products subject to warrantyprotection, historical and projected warranty claim rates,historical and projected cost-per-claim, and knowledge of specificproduct failures that are outside of the Company's typicalexperience. The Company assesses the adequacy of its pre-existingwarranty liabilities and adjusts the amounts as necessary based onactual experience and changes in future estimates. The followingtable shows changes in the Company's accrued warranties and relatedcosts for 2013, 2012 and 2011 (in millions):

D

Long-Term Debt

In May 2013, the Company issued floating- and fixed-rate noteswith varying maturities for an aggregate principal amount of $17.0billion (collectively the “Notes”). The Notes are senior unsecuredobligations, and interest is payable in arrears, quarterly for thefloating-rate notes and semi-annually for the fixed-rate notes. Asof September 28, 2013, the fair value of the Company's Notes, basedon Level 2 inputs, was $15.9 billion.

Segment Information and Geographic Data

The following table shows information by operating segment for2013, 2012 and 2011 (in millions):

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