How should Dinodyne recognize revenue from this contract

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Reference no: EM132858885

Question - In early 20X1, Dinodyne, a computer manufacturer, signed a contract with Rice University to ship 300 computers for a total price of CU 600,000 (CU 2,000 per computer). Due to the required preparatory work, Rice University agreed to ship the computers in 3 separate shipments over the next 3 months (100 computers in each shipment). Rice University obtains control over the computer during delivery (FOB Shipping point). After the first shipment was made, Rice University and Dinodyne changed the contract. Dinodyne will supply an additional 200 computers (500 total). The price for an additional 200 computers was agreed at CU 280,000, becoming CU 1,400 per computer after the discount 30%. Dinodyne provides a 30% discount for additional shipping because it hopes to collaborate with Rice University in the future. As of December 31, 20X1, Dinodyne has shipped 400 computers (300 computers as initially agreed and 100 computers under contract amendment).

Based on the above case, answer the following questions:

a. Is the change to contract a modification of the contract or a separate contract?

b. How should Dinodyne recognize revenue from this contract for the year ending on 31 December 20X1? How much is recognized income?

Reference no: EM132858885

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