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Recognizing Revenue Under a Contract Modification On August 1, 2020, a retailer enters into an arrangement with a customer to sell 10 items for $800 (580 per item) over a four month period. During August and September of 2020, the retailer sold 5 of the 10 items to the customer. On October 1, 2020, the contract is modified to include additional tems, with a transaction price o per item Because the additional items have added features, the standalone selling price of the additional items is $100 per item at the date of the contract modification Required a Describe how the retailer should account for the contract modification . Determine the amount of revenue to be recognized for the remaining units phe 5 under the original contract and the under the contract modification to be sold under the revenue contractu

Recognizing Revenue Under a Contract Modification On August 1, 2020, a retailer enters into an arrangement with a customer to sell 10 items for $800 (580 per item) over a four month period. During August and September of 2020, the retailer sold 5 of the 10 items to the customer. On October 1, 2020, the contract is modified to include additional tems, with a transaction price o per item Because the additional items have added features, the standalone selling price of the additional items is $100 per item at the date of the contract modification Required a Describe how the retailer should account for the contract modification . Determine the amount of revenue to be recognized for the remaining units phe 5 under the original contract and the under the contract modification to be sold under the revenue contractu

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Recognizing Revenue Under a Contract Modification On August 1, 2020, a retailer enters into an arrangement with a customer to sell 10 items for $800 (580 per item) over a four month period. During August and September of 2020, the retailer sold 5 of the 10 items to the customer. On October 1, 2020, the contract is modified to include 8 additional items, with a transaction price of $100 per item. Because the additional items have added features, the standalone selling price of the additional items is $100 per tem at the date of the contract modification Required a Describe how the retailer should account for the contract modification 4 b. Determine the amount of revenue to be recognized for the remaining units (the 5 under the original contract and the 8 under the contract modification to be sold under the revenue contractu 10
Transcribed Image Text:Recognizing Revenue Under a Contract Modification On August 1, 2020, a retailer enters into an arrangement with a customer to sell 10 items for $800 (580 per item) over a four month period. During August and September of 2020, the retailer sold 5 of the 10 items to the customer. On October 1, 2020, the contract is modified to include 8 additional items, with a transaction price of $100 per item. Because the additional items have added features, the standalone selling price of the additional items is $100 per tem at the date of the contract modification Required a Describe how the retailer should account for the contract modification 4 b. Determine the amount of revenue to be recognized for the remaining units (the 5 under the original contract and the 8 under the contract modification to be sold under the revenue contractu 10
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