Answer:
1. The total revenue recognized in 2019 equals $428,000.
2. The earnings before tax for 2019 amount to $118,000.
Explanation:
The following are the questions that were omitted:
"Quenneville separately sells the maintenance and repair services contracts for a total of $90,000. Quenneville utilizes the residual method to distribute the $500,000 price across the two performance obligations: the delivery of the equipment and the maintenance and repair services."
1. How much revenue does Quenneville declare for 2019?
2. What is the amount of earnings before tax reported by Quenneville in 2019?"
Solution
1. Total revenue calculation for 2019
Particulars Amount
Equipment's standalone selling price $410,000
($500,000 - $90,000)
Add: Standalone selling price for the five-year maintenance and repair contract $18,000
($90,000 divided by 5 years)
Total revenue recognized in 2019 $428,000
2. Earnings before tax calculation for 2019
Particular Amount
Total revenue recognized in 2019 $428,000
Less: Total expenses $310,000
($300,000 + $10,000)
Earnings before tax in 2019 $118,000
