Explanation Contract modification: In a contract, Companies generally modify the respective rights and performance obligations. An agreed-upon change in the goods or services that must be delivered or the contract’s price is known as a contract modification and it is also referred as contract amendment or change order. Corporation Y might use a “prospective approach” under which it treats the original contract ended and a new contract created. The amount of consideration of a new contract is $116,800 (1) . Corporation Y might recognize revenue of $3,650 per month ( $116,800 (1)÷32 months ) as services are provided over the continuing 32 months of the contract. Working note: (1)Compute the consideration of a new contract: Consideration of a new contract } = [ ( Amount of fees

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ISBN: 9781337909358

Author: WAHLEN

Publisher: CENGAGE L

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Chapter 17, Problem 3RE

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State the manner in which the modification is accounted.

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Chapter 17 Solutions

INTERM.ACCT.:REPORTING...-CENGAGENOWV2

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State the manner in which the modification is accounted.

Solution Summary: The author states the manner in which the modification is accounted for. Corporation Y might use a "prospective approach" under which it treats the original contract ended.

State the manner in which the modification is accounted.

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Chapter 17 Solutions