On 1 January 2022, LSE signs a contract with Beaver Inc to construct a new building. Beaver Inc estimates that construction will take four years. Beaver expects to incur costs of £100 in each of 2022 and 2023, £220 in 2024, and £80 in 2025. LSE will pay Beaver a total of £800 for the building. On 1 January 2024, LSE realises that the original specifications it has requested are too small and modifies its contract with Beaver to make the building larger than initially planned. The total cost of the building is now £1,400. Beaver now expects construction to finish in 2026 and expects to incur costs of £300 in 2024, £150 in 2025, and £150 in 2026. 2. Is this a contract modification and, if so, what type? a. Not a contract modification b. Separate stand-alone contract c. Termination of new contract and creation of new contract d. Modification of the existing contract ("change in the price") 3. How much revenue for this contract should Beaver recognise in 2024? a. £525 b. £535 c. £555 d. £700.

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