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Hello,
Regarding contract modification, the modification is accounted for as a separate contract if :
– The price increases by an amount that reflects the stand alone selling prices of the additional goods or services.Could you please explain what does this mean?
Thanks
Please re-read the section in our notes (Section 6 of revenue).
If it still doesn’t make sense please come back to me.
Example would be a contract to build a house – modification might be to landscape the garden.
🙂
Hello,
I’ve read the notes however, I am still having some difficulties to understand the idea behind.
Please help me on that.Thanks.
Example
Hotel prices:
– Room 100
– Breakfast 10
– Room and breakfast 107Customer buys room only for 100
If she later changes her mind and says she wants breakfast as well:If the hotel charges her 10 for breakfast – 2 separate contracts
If the charge is only 7 – then 1 single contract (and the price would be pro-rated to the 2 performance obligations).All very academic 🙂
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