Problem
A car manufacturer is offering the following incentive with any purchase of its new 2022 full-size pickup trucks: free oil changes for a year. The vehicle sells for $39,500. Assume there are no other promotions running during this time. The car manufacturer estimates that the normal selling price for oil change services it will provide to customers, on average, over the one-year period under this promotion is $500. Assuming the customer pays $39,500 for the vehicle, how much revenue is recognized on the sale date? You can ignore the time value of money.