Alpha Mechanical Corporation (AMC) is a calendar year, accrual method, C Corporation. AMC is engaged in the business of selling and servicing specialized manufacturing equipment in the Aerospace market. During the fourth quarter of 2021, AMC received the following payment:

• Equipment Service Payment

AMC received, in full, a $540,000 advanced payment for an 18-month service contract on manufacturing equipment sold by AMC in October of 2021 to its client, Delta Airlines. Under the terms of the contract, AMC will provide all routine maintenance and service work on the equipment sold to Delta from November 1, 2021 through April 30, 2023.

Please answer the following

What amount of service income should AMC report in 2021, 2022, and 2023 on its financial accounting (GAAP) income statements? Please show your work and explain your calculations.

What amount of service income should AMC report in 2021, 2022, and 2023 on its federal tax return? Please show your work and explain your calculations.