Accounting problem

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. Cullumber’s 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 1, 2024, Crane Ltd. purchased a crane and service package from Cullumber. The contract is for $389,000 and includes the crane and 3 years of maintenance services once the crane is delivered. The crane that was purchased by Crane would normally sell for $337,840 and 3 years of maintenance services would be valued at $74,160 if purchased separately. The crane had a manufacturing cost of $229,000. Cullumber’s management expects the crane to be delivered by November 1, 2024. The maintenance services are expected to be provided evenly for 3 years after the delivery of the crane. The contract requires Crane to make a $156,490 payment to Cullumber within 30 days of signing the contract and then $156,490 on delivery with the balance to be paid annually over 3 years once the crane is delivered on November 1, 2024, starting November 1, 2025. Crane has secured financing to pay for the crane system and so Cullumber’s management has no concerns related to collectibility.