Classify modifications and principal-agent presentation

Midway through support, the customer adds 12 months at a 30 percent discount. In a separate channel, Linden Peak bills a customer $10,000 for a third-party inspection and remits $9,000 to the inspector. “New order” and “gross invoice” are operational labels, not the two accounting conclusions. These are short illustrative drills; Linden Peak's cumulative case later uses an additional-device change order and requires its own evidence and schedule.

Route the modification

Confirm approval and enforceable scope or price. Then ask:

• Are added goods or services distinct?
• Is their added price consistent with SSP adjusted for contract circumstances?
• Are the remaining original goods or services distinct from those already transferred?
• Does the modification change one partially satisfied combined obligation?

Distinct additions at appropriate SSP form a separate contract. Remaining distinct performance without appropriate SSP is generally treated prospectively as termination of the old residual and creation of a new contract. A change to an existing obligation whose remaining work is not distinct updates the price and measure of progress through a cumulative catch-up. Mixed facts can require both effects.

For the twelve support months, the monthly service periods are distinct. If the discount is not supported by current SSP evidence, combine remaining original allocation with modification consideration and spread it prospectively across the remaining service units. Do not rewrite revenue for months already provided.

Identify the specified inspection service

Before counting principal-agent indicators, define what the customer receives. If Linden Peak promises an integrated certified system and controls the inspection service as an input before transfer, gross presentation may be supported. If it only arranges direct inspection by a third party that remains responsible to the customer, net commission presentation may be supported.

Primary responsibility, inventory or fulfillment risk, and pricing discretion help evaluate control but are not votes. Billing $10,000 and retaining $1,000 does not itself prove either gross $10,000 revenue with $9,000 cost or net $1,000 revenue.

Two decision records

Prepare one modification tree with original residual, new terms, SSP, remaining distinctness, path, and schedule. Prepare one principal-agent memo with specified good or service, supplier and customer contracts, control before transfer, indicators, gross/net amount, cash presentation, and disclosure. Keep the trees separate even when one contract contains both issues.

Apply both records in the Cedar Trail worked example. It supplies the judgment inputs and shows the prospective and net-presentation arithmetic. Then use the Northstar practice to make the decisions from a different evidence set.