Required: For each of the following scenarios, determine if a separate contract is created by the modification and describe the accounting for revenue recognition. a. Entity Suppliers agrees to increase the number of cartridges by 50 units at a price of $1,250 each which is equal to the estimated stand-alone selling price for the cartridges. b. Entity Suppliers agrees to increase the number of cartridges by 50 units at the original contract price of $1,000 each which is significantly below the estimated stand-alone selling price for the cartridges. c. Same as (b) except Entity Suppliers determines the contract price of $1,000 is equal to the estimated stand-alone selling price for the cartridges after giving consideration to any adjustments that would be made based on the facts and circumstances.

Orange Corp enters into a non-cancellable contract with Coles Ltd to supply 200,000 units of goods on an annual basis for $3 per unit for three years. At the beginning of the third year, Orange and Coles agree to renegotiate the contract because the market price for the goods has declined. Under the modified agreement, the parties agree to extend the contract for an additional year (same fixed annual quantity) and reduce the price per unit to $2 for the remaining 400,000 units of goods to be delivered. As part of the contract modification, Orange Corp also agrees to make a non-refundable payment of $20,000 to Coles Ltd to compensate for the changes it needs to make to its shelving to accommodate the goods purchased from Orange Corp. There is no dispute between the parties regarding prior performance, and both parties have performed according to the terms of the contract. Orange determines that the remaining goods are distinct from those previously delivered and concludes that the…

On June 1, 2016, TCO enters into a forward agreement with XYZ to buy 100,000 gallons of fuel oil at $2.40 on December 31, 2016. At the time of inception of the forward, the price of fuel oil is $2.45. On December 31, 2016, the price of fuel oil is $2.48. The contract allows for net settlement. Required What is the net settlement on the forward contract?

According to the ideas behind the revenue recognition standard of the FASB, when a seller enters into a contract with a buyer, the seller accepts certain performance obligations in exchange for the promise of receiving assets from the buyer. Under this standard, when does the seller RECOGNIZE REVENUE? When the seller enters into a contract with the buyer When the seller satisfies a performance obligation to the buyer When the seller spends 50 percent or more of the cash needed to serve the buyer When the seller collects cash from the buyer