Easily Replace Alternative Choice to the Accounting Contract

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How to Replace Alternative Choice to the Accounting Contract

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this video will walk you through incremental analysis for replacing or retaining equipment in a decision to retain or replace equipment mancell compares the cost which are affected by the two alternatives generally the relevant items to be considered are the variable manufacturing cost and the cost of new equipment the book value of the machine old machine is a sunk cost which does not reflect the decision remember a sunk cost is a cost that cannot be changed by present or future decisions so just a quick reminder of what is Book value we talk about Book value thats simply the cost of the equipment less its accumulated appreciation so any book value means that we have not depreciated the piece of equipment totally yet and when if you just eliminate that piece of equipment and dont get any trade-in value that book value becomes a loss on the income statement so instead of depreciating it and we impact our income statement itll be a loss both have the same impact on the income stateme

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What is an administrative change to a contract?

Administrative change means a unilateral (see 43.103(b)) contract change, in writing, that does not affect the substantive rights of the parties (e.g., a change in the paying office or the appropriation data).

What is contract modification under 606?

ASC 606 defines a contract modification as a change in scope and/or price to an original contract. In other words, a contract modification is any change to the enforceable rights and obligations of the parties to the original contract.

What is a contract modification in accounting?

A contract modification could change the scope of the contract, the price of the contract, or both. A contract modification exists when the parties to the contract approve the modification either in writing, orally, or based on the parties customary business practices.

What types of changes are suitable for contract modifications?

Contract modifications are of the following types: (a) Bilateral. (1) Make negotiated equitable adjustments resulting from the issuance of a change order; (2) Definitize letter contracts; and. (3) Reflect other agreements of the parties modifying the terms of contracts. (b) Unilateral. (1) Make administrative changes;

What type of modification is used to make an administrative change to a contract that does not affect the substantive rights of the contracting parties?

Administrative changes are unilateral changes that do not affect the substantive rights of the parties. They are used to make changes such as change in the paying office or name of the contracting officer. A contracting officer may need to issue an out-of-scope modification.

What is a contract modification?

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.

What is the reason for contract modification?

Reasons for Contract Modifications Change the duration of the contract. Alter certain requirements under the contract, such as the number of items being requested. Change certain terms within the contract, such as payment date, amount, dates by which goods and services are to be received, etc.

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.

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