AA Inc. granted a franchise to BB Inc. to operate its registered fast-food business. The contract was signed on January 1, 2023 with initial franchise fee of P1,000,000 payable in P400,000 cash and the balance in five equal semi-annual installments every June 30 and December 31. The noninterest bearing promissory note has implicit rate of 10% (PV Factor = 4.32948). The Contract provides that BB Inc. shall pay continuing franchise fee equal to 5% of the revenue from the fast-food business. BB Inc, reported a revenue in the amount of P200,000 during 2023. At the end of the year, AA Inc. has satisfied the performance obligation required under the franchise contract.

Under IFRS 15, what is the total revenue recognize by AA Inc. for the year ended December 31, 2023?

Answer rating: 100% (QA)

Under IFRS 15 the revenue recognition principle states that revenue should be recognized when contro... View the full answer