Question

Vaper Software provides business analytics software products, including Vaper Desktop, Vaper Server, and Vaper Online. It is considered a leader in the data analytics/business intelligence movement. However, Vaper doesn't just license its products for use by others. It also provides maintenance, support, training, and professional services to various customers. As a consequence, its income statement shows two sources of operating revenues (product licenses/maintenance and services) and two related costs of goods/services provided to customers. Presented below are the items adapted from its recent income statement for the year ended December 31 (in thousands, except per share amounts). Net earnings per share were minus $2.35, which would normally be noted as ($2.35), and the weighted average shares used in the computation was 78,976. Cast a licenses Cast of maintenance and services General and administrative expense Income tax expense License revenue $ 13,590 100, 120 102.970 6,950 429,300 Maintenance and services revenue Other incode Sales and marketing expense Research and development expense $447,950 12.360 517.540 334,240 Required: 1. Recognizing that Vaper has two sources of operating revenues, prepare a classified (multiple-step) income statement. 2. Which source of operating revenues produces the higher gross profit? Required 1 Recognizing that Vaper has two sources of operating revenues, prepare a classified income statement. (Enter all losses with a minus sign. Enter your answers in thousands.) VAPER SOFTWARE Consolidated Statement of Income (In millions) Net revenues: Total net revenue Cost of sales: Total cost of sales Operating expenses Total operating expenses Required 2 Which source of operating revenues produces the higher gross profit? Source of operating revenue

Answer 1

Note: The instructions in red mention to enter answers in thousands while on the income statement it is mentioned in thousands. Kindly enter as required.

1.

VAPER SOFTWARE
Consolidated Statement of Income
For the Year Ended December 31
(in thousands)
Net revenues:
License revenue	429300
Maintenance and service revenue	447950
Total net revenue		877250
Cost of sales:
Cost of licenses	13590
Cost of maintenance and services	100120
Total cost of sales		113710
Gross profit		763540
Operating expenses:
General and administrative expense	102970
Sales and marketing expense	517540
Research and development expense	334240
Total operating expenses		954750
Income from operations		-191210
Other income		12360
Income before income taxes		-178850
Income tax expense		6950
Net income		-185800

2. Source of operating revenue: License revenue

Gross profit:

License: $429300 - $13590 = $415710

Maintenance and service: $447950 - $100120 = $347830