On January 1, 20X1, 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 five years. Quenneville’s cost to provide the services are $10,000 per year. Quenneville sells the fiveyear 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:

1. What amount of revenue does Quenneville report in 20X1?

2. What amount of earnings before taxes does Quenneville report in 20X1?