In early 20X1, Tech PC, a computer manufacturer, signed a contract with University of MajuJaya to ship 300 computers for a total price of CU 600,000 (CU 2,000 per computer). Due tothe necessary preparatory work, Forward University agreed to ship computers in 3 separateshipments over the next 3 months (100 computers in each shipment). University of Maju Jayaobtains control over the computer during delivery (FOB Shipping point). After the firstshipment was made, University of Maju Jaya and Tech PC changed the contract. Tech PCwill supply an additional 200 computers (500 total). The price for an additional 200computers was agreed at CU 280,000, becoming CU 1,400 per computer after a 30%discount. Tech PC provides a 30% discount for additional shipping because it hopes tocollaborate with Maju Jaya University in the future. As of December 31, 20X1, Tech PC hasshipped 400 computers (300 computers as initially agreed and 100 computers under contractamendment).Based on the above case, answer the following questions:a. Is the change to contract a modification of the contract or a separate contract?b. How should Tech PC recognize revenue from this contract for the year ended December 31, 20X1?How much is recognized income?

The change in the contract is a modification of the contract. The recognized income is $740,000.

a. Is the change to contract a modification of the contract or a separate contract? b. How should Tech PC recognize revenue from this contract for the year ended December 31, 20X1? How much is recognized income?

a. Is the change to contract a modification of the contract or a separate contract? b. How should Tech PC recognize revenue from this contract for the year ended December 31, 20X1? How much is recognized income?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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