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How to Remove Calculations to the Acknowledgment Of Modified Terms

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hello and welcome to this session in which we would look at an exercise or a CPA exam simulation that deals with contract modification as of September 20x2 Roger Distributors Inc made the commitment to Staples to sell 150 iPhone compatible covers for a total of 1 500 at a rate of 10 per unit the covers were to be delivered to Staples over a six-month period however after delivering 90 covers the contract between the two company was modified and Roger agreed to deliver an additional 45 for 427.50 which will give you a selling price of 9.50 simply put what they did is now they decided to sell those additional ones four nine fifty additional 45. its important to note that all sales between the two companies were conducted on a cash on delivery basis and the cost for each cover for Roger is four dollars because were gonna be preparing journal entries using the Perpetual inventory system record the journal entry for the sale for the first 90 covers well we sold 90 covers it was ten dollar

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How do you account for a contract modification?

A contract modification that only affects the transaction price is either accounted for prospectively or on a cumulative catch-up basis. It is accounted for prospectively if the remaining goods or services are distinct. There is a cumulative catch-up if the remaining goods or services are not distinct.

What is the rule for contract modification?

A modification of contract is any change, in part or whole, occurring to a legally binding agreement between two or more parties. Any contract can be modified before or after signing the agreement, but all parties must agree to the changes. If any party doesnt agree to the modification, the changes are invalid.

Is a contract modification a change in scope and or price of a contract?

Under IFRS 15.18, contract modification is a change in the scope or price of a contract, or both. This may be described as a change order, a variation, or an amendment. When a contract modification is approved, it creates or changes the enforceable rights and obligations of the parties to the contract.

What are the requirements for a contract modification?

You can modify a contract at any time as long as all parties involved in the agreement consent to the changes. Minor modifications may be handwritten on the original document and then signed by all parties. Major changes, however, need to involve a contract renegotiation, reprinting, and resigning.

What does contract modification mean?

A contract modification (mod) is any written change by the contracting officer to the contract terms and conditions. A mod can be issued at any time after the contract is awarded.

Can a contract be modified without consideration?

A contract, either oral or written, may be modified by a subsequent agreement which is supported by legally sufficient consideration, or a substitute therefor, and meets the requirements for contract formation.

What is the difference between a contract modification and an amendment?

Contract modification means any changes in the terms or provisions of the Contract which are reduced to writing and fully executed by both parties. Amendment means a written agreement, signed by the Parties, which documents changes to the Contract other than those permitted by Work Orders or Technical Guidance Letters.

How do you account for contract modifications?

A contract modification that only affects the transaction price is either accounted for prospectively or on a cumulative catch-up basis. It is accounted for prospectively if the remaining goods or services are distinct. There is a cumulative catch-up if the remaining goods or services are not distinct.

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