A contract modification is accounted for as a cumulative catch-up adjustment if the goods or services are not distinct and are part of single performance obligation.

Question

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When a contract modification includes goods or services that are not distinct and form part of a single performance obligation that is partially satisfied at the date of the contract modification, it is accounted for as a cumulative catch-up adjustment to revenue. This reflects the change in the transaction price and the extent of progress towards complete satisfaction of the performance obligation.

A Contract Modification Is Accounted for as a Cumulative Catch-Up