How should loud account for the contract modification

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Reference no: EM133906312

Problem

On January 1, Year 1, 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 smart phone for which the customer pays $299. Loud also sells the smart phone and monthly service plan separately, charging $649 for the smart phone and $65 for the monthly service for the unlimited talk and 5 GB data wireless plan. On July 1, Year 1, 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. How should Loud account for this contract modification? Get the instant assignment help. Provide Loud's new monthly revenue recognition journal entries.

Reference no: EM133906312

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