Question
(Allocate Transaction Price, Modifi cation of Contract) Refer to the Tablet Bundle A revenue arrangement in P18.1. In response to competitive pressure for Internet access
(Allocate Transaction Price, Modifi cation of Contract) Refer to the Tablet Bundle A revenue arrangement in P18.1. In response to competitive pressure for Internet access for Tablet Bundle A, after 2 years of the 3-year contract, Tablet Tailors off ers a modifi ed contract and exten- sion incentive. The extended contract services are similar to those provided in the fi rst 2 years of the con- tract. Signing the extension and paying $90 (which equals the standalone selling of the revised Internet service package) extends access for 2 more years of Internet connection. Forty Tablet Bundle A customers sign up for this off er. Instructions a. Prepare the journal entries when the contract is signed on January 2, 2022, for the 40 extended con- tracts. Assume the modifi cation does not result in a separate performance obligation. b. Prepare the journal entries on December 31, 2022, for the 40 extended contracts (the fi rst year of the revised 3-year contract).
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