Kramer Corporation enters a contract to sell 100 custom-made iron pipes to a customer for $300,000 on December 31, 2016, and the customer pays the full amount on that date. The sales contract requires that Kramer store the purchased goods for no more than 2 months since the iron pipes are not needed by the customer for production at present. Although the customer does not provide a specific delivery schedule for the goods, Kramer estimates that it will store the goods for two months. Kramer packages the pipes in wooden crates ready for shipment and stores them in an area separate from its inventory on December 31, 2016. Although Kramer did not assess separate charges in the contract, if it were to do so the stand-alone cost of the iron pipes would be $296,000 and the cost of storing the iron pipes would be approximately $10,000. The customer receives the legal title of these goods on December 31, 2016 and has the right to use the goods however it chooses during the storage period.

Required. Based on “revenue recognition” principles, how much (if any) revenue should Kramer recognize from the sale of the iron pipes in 2016? How much (if any) revenue should be recognized in 2017? Explain your reasoning to support your answer.