A company must account for a contract modification as a new contract if
A) the modification adds distinct goods or services at a price that reflects their stand-alone selling price.
B) the seller has the right to receive consideration equal to the stand-alone selling price of the promised goods or services.
C) the promised goods or services are distinct and separable from other goods or services promised in the original contract.
D) the promised goods or services are distinct and the contract has commercial substance.

Question

Quizplus · Accepted Answer

A contract modification should be accounted for as a new contract if the modification adds distinct goods or services at a price that reflects their stand-alone selling price. This is because the modification is effectively equivalent to entering into a new contract for those additional goods or services at their stand-alone selling prices.

A Company Must Account for a Contract Modification as a New