Question: Assume the same facts as in E17-5. On July 1, 2019, the customer realizes that she needs less data in her wireless plan and downgrades

Assume the same facts as in E17-5. On July 1, 2019, the customer realizes that she needs less data in her wireless plan and downgrades to the unlimited talk and 2 GB data plan for the remaining term of the contract (18 months). The unlimited talk and 2 GB data plan is priced at $55 per month. The $55 per month is Loud’s current stand-alone price for this plan that is available to all customers.

Required:
1. How should Loud account for this contract modification?
2. Provide Loud’s new monthly revenue recognition journal entry.

E17-5

On January 1, 2019, Loud Company enters into a 2-year contract with a customer for an unlimited talk and 5 GB data wireless plan for $65 per month. The contract includes a smartphone for which the customer pays $299. Loud also sells the smartphone and monthly service plan separately, charging $649 for the smartphone and $65 for the monthly service for the unlimited talk and 5 GB data wireless plan.

Step by Step Solution

★★★★★

3.32 Rating (155 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

1 The contract modification does not add goods or services to the arrangement therefore this modific... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Intermediate Accounting Reporting Questions!

The Silver Rule states, Do not do unto others what you do not want them to do unto you. Which of the five workable ethical theories is closest to the Silver Rule?

Assume the same facts as in E17-5 and ignore E17-6. On July 1, 2019, the customer realizes that she needs a text messaging plan and adds an unlimited text messaging plan for the remaining term of the...

On January 1, 2019, Piper Company entered into an agreement with Save-Mart to sell its most popular product, the gadget. The contract stipulates that the price per unit will decrease as Save-Mart...

JustKitchens Inc. provides services to restaurants and hotels. The company supplies paper products, tableware, cookware, restaurant and kitchen equipment, and cleaning supplies. On January 2, 2019,...

please help with question E17-5 and E17-6. thank you. thank you mundon. 17.5 10 17.5 SHOW ME HOW Determine the Transaction Price Olan transaction Price On January 1, 2019, Loud Company enters into a...

Please help with questions: E17-5, and E17-6 Thank you. E17-5 LO 17.5 Determine the Transaction Price On January 1, 2019, Loud Company enters into a 2-year contract with a cus- tomer for an unlimited...

Please help with question E17-6 Thank you mundon. 17.5 10 17.5 SHOW ME HOW Determine the Transaction Price Olan transaction Price On January 1, 2019, Loud Company enters into a 2 year contract with a...

17-5 1 Firty dresses were civic C journal entry to record revenue. modified to sell, once the original 500 dresses are delivered, an additional Tou $, which is the stand-alone selling price on...

Assume the same facts as in E17-5. On July 1, 2017, the customer realizes that she needs less data in her wireless plan and downgrades to the unlimited talk and 2 GB data plan for the remaining term...

Contract Modification Assume the same facts as in E17-5. On July 1, 2017, the customer realizes that she needs less data in her wireless plan and downgrades to the unlimited talk and 2 GB data plan...

Instructions On January 1, 2019, Loud Company enters into a 2-year contract with a customer for an unlimited talk and 5 GB data wireless plan for $64.00 per month. The contract includes a smartphone...

The tax return filing requirements for individuals who can be claimed as a dependent on another person's tax return. An individual who can be claimed as a dependent on another person's tax return...

In Figure, the logarithm of E r (t) versus the logarithm of time is plotted for polyisobutylene at a variety of temperatures. Make a plot of E r (10) versus temperature and then estimate its T g . 10...

Why are the labor efficiency and variable overhead efficiency variances similar in nature?

=+ Understand the nature of measurement error and its impact on multivariate analysis.

Escargot Inc. is a 5 star restaurant in Cincinnati. The restaurant sells 500 gift cards during January 2017. Each gift card has a face value of $ 300. The gift cards never expire, although based on...

Prior to ASU 2014 09 changing the principles underlying revenue recognition, companies recognized revenue when it was earned and realized. The principles of earned and realized were replaced with a...

Village Company is accounting for a long term construction contract where revenue is recognized over time. The project is built to the customers specifications, and the customer can make changes as...

I think I got the graph right, but the true/false question is throwing me off. Thanks! An NPV profile plots a project's NPV at various costs of capital. A project's NPV profile is shown as follows....

The price of Ervin Corp. stock will either be $ 6 7 or $ 8 5 at the end of the year. Call options are available with one year until expiration. Continuously compounded T - bills currently yield 5 . 2...

Computer Science II func. assignment #2 This is an example of a function where, (in the function) you read in 3 numbers, do a calculation, and return a value Write a C function that will: Determine...