a. Is the change to contract a modification of the contract or a separate contract? b. How should Tech PC recognize revenue from this contract for the year ended December 31, 20X1? How much is recognized income?

Practical Management Science
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ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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In early 20X1, Tech PC, a computer manufacturer, signed a contract with Forward University to ship 300 computers for a total price of CU 600,000
(2,000 CU per computer). Due to the necessary preparatory work, Forward University agreed to ship computers in 3 separate shipments over the next 3 months (100 computers in each shipment). Maju Jaya University
acquire control of the computer during delivery (FOB Shipping point). After the first shipment was made, Maju Jaya University and Tech PC changed the contract. Tech PC will supply an additional 200 computers (500 total). Price for an additional 200 computers agreed to be CU 280,000, to CU 1,400 per computer after a 30% discount. Tech PC provides a 30% discount for additional shipping because it hopes to collaborate with Maju Jaya University in the future. As of December 31, 20X1, Tech PC has shipped 400 computers (300 computers as initially agreed and 100 computers under contract amendment). Based on the above case, answer the following questions:
a. Is the change to contract a modification of the contract or a separate contract?
b. How should Tech PC recognize revenue from this contract for the year ended December 31, 20X1? How much is recognized income?

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