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 $299. Loud also sells the smartphone and monthly service plan separately, charging $649 for the smartphone and $65 for the monthly service for the unlimited talk and 5 GB data wireless plan. On July 1, 2017, the customer realizes that she needs a text messaging plan and adds an unlimited text messaging plan for the remaining term of the contract (18 months). The unlimited text messaging plan is priced at $15 per month. This is the current pricing for this plan available to all customers.

Required:

1.

How should Loud account for this contract modification?

Loud determines that the modification (should be/should not be) treated as a separate contract because the modification has resulted in an addition to the contract of goods or services that are (same as/distinct) and the monthly price for those services is reflective of the entitys (combined/stand-alone) selling price.

2.

Provide Louds new monthly revenue recognition journal entries.