On January 1, 2019, Quenneville Corporation sold equipment to Wirtz, Inc., for $500,000. The equipment had cost $300,000 to manufacture.
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On January 1, 2019, Quenneville Corporation sold equipment to Wirtz, Inc., for $500,000. The equipment had cost $300,000 to manufacture. The contract with Wirtz requires Quenneville to provide complete maintenance and repair services on the equipment for 5 years. Quenneville’s cost to provide the services are $10,000 per year. Quenneville sells the 5-year maintenance and repair services contracts separately for $90,000. Quenneville uses the residual approach to allocate the $500,000 transaction price between the two performance obligations: delivery of the equipment and the maintenance and repair services.
Required:
- What amount of revenue does Quenneville report in 2019?
- What amount of earnings before taxes does Quenneville report in 2019?
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