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On January 1, 2017, Loud Company enters into a 2 year contract with a customer for an unlimited talk and 5 GB data wireless plan

On January 1, 2017, Loud Company enters into a 2 year contract with a customer for an unlimited talk and 5 GB data wireless plan for $65 per month. The contract includes a smartphone for which the customer pays $j299. Loud also sells the smartphone and monthly service plan separately, charging $649 for the smartphone and $65 for the mointhly service for unlimited talk and 5 GB data wireless plan.

Contract Modification- Assume the same facts above. On July 1, 2017, the customer realizes that she needs less data in her wireless plan and downgrade to the unlimited talk and 2 GB data plan for the remaining term of the contract (18 months). The unlimited talk and 2 GB data plan is priced at $55 per month. The $55 per month is Loud's current stand- alone price for this plan that is available to all customers.


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1. How should Loud account for this contract modification?

2. Provide Loud's new monthly revenue recognition journal entry.

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1 Account for the contract modification In this case Company L should account for the contract modi... blur-text-image

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