Contracts
Yankee Corp. agrees to provide Albany Company 24 months of coaching services. The contract sets the price at $4,000 per month, which is the normal stand-alone price that Yankee charges. After 16 months, Yankee and Albany agree to modify the contract. Yankee reduces the fee for the 8 remaining months to $3,800 per month, and Albany agrees to a 24-month extension at a cost of $3,600 per month. At the time that the contract is modified, Yankee is charging other customers $3,750 per month for the coaching service. If Yankee determines that the additional services are distinct from the goods and services transferred in the original contract, how would it account for the modification?
Yankee would use a in which it considers the original contract terminated and a new contract created.
Yankee would then recognize revenue of $ per month.
Contracts
Yankee Corp. agrees to provide Albany Company 24 months of coaching services. The contract sets the price at $4,000 per month, which is the normal stand-alone price that Yankee charges. After 16 months, Yankee and Albany agree to modify the contract. Yankee reduces the fee for the 8 remaining months to $3,800 per month, and Albany agrees to a 24-month extension at a cost of $3,600 per month. At the time that the contract is modified, Yankee is charging other customers $3,750 per month for the coaching service. If Yankee determines that the additional services are distinct from the goods and services transferred in the original contract, how would it account for the modification?
Yankee would use a in which it considers the original contract terminated and a new contract created.
Yankee would then recognize revenue of $ per month.
