A contract adds distinct goods and services and the contract price does not reflect the stand-alone selling price of these goods and services. How is the contract modification accounted for?
A) as a separate contract
B) prospective method
C) retrospective method
D) cumulative catch-up method.

Question

Quizplus · Accepted Answer

When a contract modification adds distinct goods or services and the contract price does not reflect the stand-alone selling prices, the modification is accounted for using the prospective method. This means the modification is treated as a separate contract going forward, without adjusting past revenue.

A Contract Adds Distinct Goods and Services and the Contract