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Cullumber Ltd . is a public company that manufactures and sells heavy equipment such as cranes and provides service contracts for the maintenance of the
Cullumber Ltd is a public company that manufactures and sells heavy equipment such as cranes and provides service contracts for the maintenance of the equipment. Cullumbers customers can purchase a crane or service contract separately, but the company also offers a crane with a service contract as a package. On June Crane Ltd purchased a crane and service package from Cullumber. The contract is for $ and includes the crane and years of maintenance services once the crane is delivered. The crane that was purchased by Crane would normally sell for $ and years of maintenance services would be valued at $ if purchased separately. The crane had a manufacturing cost of $ Cullumbers management expects the crane to be delivered by November The maintenance services are expected to be provided evenly for years after the delivery of the crane. The contract requires Crane to make a $ payment to Cullumber within days of signing the contract and then $ on delivery with the balance to be paid annually over years once the crane is delivered on November starting November Crane has secured financing to pay for the crane system and so Cullumbers management has no concerns related to collectibility.
Assuming that Cullumber provides the goods and services as and when expected under the contract and Crane makes its payments as required, determine when and how much revenue Cullumber would be able to recognize in each of the first four fiscal years ending December of the contract. Do not round intermediate calculations. Round allocation percentage to decimal places, eg and final answers to decimal places, eg
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