Ruby Company manages the daily operations for the human resources department of Jade Company. In terms of the contract, Ruby receives a fee of \($100\) per year for each employee on Jade’s payroll, less the salary of Jade’s bookkeeper, who works full-time on human resource matters. Jade is the ”primary obligor” for the bookkeeper’s salary. Last year, Jade had 1,000 employees on its payroll and the bookkeeper’s salary (which was paid by Jade) was \($40,000.\) Ruby’s other administrative expenses were \($10,000\).

Required

a. What is the amount of revenue that Ruby Company should report on its income statement for last year in terms of EITF 01-14?

b. What was Ruby’s operating income for last year (ignoring taxes)?