On July 1, 2021, the franchisor company entered into a franchising agreement with a franchisee for...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On July 1, 2021, the franchisor company entered into a franchising agreement with a franchisee for a contract price of P1,000,000 payable as follows: P500,000 payable on the date of signing the contract, and five equal annual payments of P100,000 commencing on June 30, 2022 as evidenced by a non-interest bearing note. The effective rate for this type of note is 10% (use 2 decimal places for the PV factor). The contract states that, other than the initial franchise fee, the franchisee must also pay the franchisor an amount equivalent to 3% of its net sales revenue. On the other hand, the contract also states that the franchisor must provide the franchisee the right to access the intellectual property for 5 years, deliver an equipment, orient the employees with the company policies for 1 month, and train the employees for the required skills needed for 1 month It was determined that the orientation is a prerequisite to the training, hence both were combined into one separate performance obligation with an assessed market value of P247,500. The intellectual property had an observable selling price of P825,000. The franchisee commenced its operations on September 1, 2021 after the delivery of the equipment and orientation and training of the employees. During the 4 months ended before the close of the calendar year, the franchisee earned P2,300,000 in net sales revenue. If the equipment cost the franchisor P519,750 and it normally sells this at a margin of 10% based on sales, how much is the total revenue recognized by the franchisor for the year ended December 31, 2021? A. 483,450 B. 552,750 C. 571,400 D. 596,400 If the equipment cost the franchisor P519,750 and it normally sells this at a margin of 10% based on sales, but it has an observable selling price of P927,500, how much is the initial franchise revenue recognized by the franchisor for the year ended December 31, 2021? A. 483,450 B. 552,671 6: 87,606 If the equipment cost the franchisor P519,750 and it normally sells this at a margin of 10% based on sales, but it has an observable selling price of P927,500, how much is the transaction price allocated to the training and orientation? A. 247,500 B. 131,850 C. 108,776 D. 65,925 On July 1, 2021, the franchisor company entered into a franchising agreement with a franchisee for a contract price of P1,000,000 payable as follows: P500,000 payable on the date of signing the contract, and five equal annual payments of P100,000 commencing on June 30, 2022 as evidenced by a non-interest bearing note. The effective rate for this type of note is 10% (use 2 decimal places for the PV factor). The contract states that, other than the initial franchise fee, the franchisee must also pay the franchisor an amount equivalent to 3% of its net sales revenue. On the other hand, the contract also states that the franchisor must provide the franchisee the right to access the intellectual property for 5 years, deliver an equipment, orient the employees with the company policies for 1 month, and train the employees for the required skills needed for 1 month It was determined that the orientation is a prerequisite to the training, hence both were combined into one separate performance obligation with an assessed market value of P247,500. The intellectual property had an observable selling price of P825,000. The franchisee commenced its operations on September 1, 2021 after the delivery of the equipment and orientation and training of the employees. During the 4 months ended before the close of the calendar year, the franchisee earned P2,300,000 in net sales revenue. If the equipment cost the franchisor P519,750 and it normally sells this at a margin of 10% based on sales, how much is the total revenue recognized by the franchisor for the year ended December 31, 2021? A. 483,450 B. 552,750 C. 571,400 D. 596,400 If the equipment cost the franchisor P519,750 and it normally sells this at a margin of 10% based on sales, but it has an observable selling price of P927,500, how much is the initial franchise revenue recognized by the franchisor for the year ended December 31, 2021? A. 483,450 B. 552,671 6: 87,606 If the equipment cost the franchisor P519,750 and it normally sells this at a margin of 10% based on sales, but it has an observable selling price of P927,500, how much is the transaction price allocated to the training and orientation? A. 247,500 B. 131,850 C. 108,776 D. 65,925
Expert Answer:
Answer rating: 100% (QA)
Hello student Heres the answer I If the equipment cost the franchisor P519750 and it normally sells ... View the full answer
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
Posted Date:
Students also viewed these accounting questions
-
On January 1, 2007 the Hadad Company entered into a consignment agreement with the Trinidad Company. The agreement specifies that the consignee (Trinidad) is to sell the merchandise at a price of 30%...
-
On January 1, 2010, the Hadad Company entered into a consignment agreement with the Trinidad Company. The agreement specifies that the consignee (Trinidad) is to sell the merchandise at a price of...
-
On March 1, 2007, Winter Company entered into a contract to build an apartment building. It is estimated that the building will cost $2,000,000 and will take 3 years to complete. The contract price...
-
The MRP gross requirements for Item A are shown here for the next 10 weeks. Lead time for A is three weeks and setup cost is $ 10. There is a carrying cost of $ 0.01 per unit per week. Beginning...
-
Flamingo Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Flamingo Company prepared the following trial balance at July 31, 2006, the end of the...
-
How might consumers differ in their motivation to carry out price information search? How are these differences likely to affect price-level awareness?
-
Weighted per unit overhead rate Following are data on garden sun umbrellas produced by Shado Company: No. of units budgeted Direct labor hours per unit. Direct labor cost per hour Direct material...
-
Mercury Corporation issued 6,000 shares of no-par common stock for $45 per share. Mercury also issued 3,000 shares of $50 par, 5 percent noncumulative preferred stock at $52 per share. Required a....
-
The loudness level of a sound can be expressed by comparing the sound's intensity to the intensity of a sound barely audible to the human ear. The formula D - 10 ( log I - log In ) describes the...
-
On a particular day, a random sample of 12 tins of peas was taken from the output of a canning factory, and their contents were weighed. The mean and standard deviation of weights (of the contents of...
-
A current of 10 A flows through a resistor for 10 minutes and the power dissipated by the resistor is 100 watts. Find the p.d. across the resistor and the energy supplied to the circuit.
-
Demand information (per week) Region1: Normal with mean 250, std dev. 90 Region 2: Normal with mean 180, std dev. 70 Configuration 1: Warehouses at location A and B When available, use inventory to...
-
Zaiden is planning to present a writing review at the sales team's training session. Zaiden wants to use a typical letter sent to customers as an example and correct it as part of the training...
-
A partition brick wall of size 3m x 5m contains a window of area 2m. The brick wall gives a sound reduction of 50dB and the window 20 dB. Calculate the sound reduction of the whole partition at this...
-
A service-oriented business is struggling to manage its resources efficiently. How can ERP software assist in scheduling, allocating, and tracking resources such as personnel and equipment?
-
A single effect evaporator is supplied with a feed of 4200 kg/h of a 2.9 % solution of sugar in water at a temperature of 12C. The product has a concentration of 9.0 % sugar in water. The evaporator...
-
Which of the following functions is NOT typically involved in a cross-functional product development effort? Group of answer choices finance marketing all of these functions are involved. operations
-
What kind of financial pressures can an LBO cause?
-
Bobs Chocolate Chips and More, a bakery specializing in gourmet pizza and chocolate chip cookies, started business October 1, 2014. The following transactions occurred during the month. a. Common...
-
Walgreen Co. (Walgreens) is based in Illinois and was originally incorporated in 1909. As of August 31, 2009, it operated 7,496 locations in 50 states, the District of Columbia, Puerto Rico, and...
-
Bunker Company negotiated a lease with Gilbreth Company that begins on January 1, 2014. The lease term is three years, and the assets economic life is four years. The annual lease payments are...
-
No. The break in an investor-owned firm's MCC schedule is due to the higher cost involved with issuing new common stock once the firm's retained earnings has been exhausted. Since not-for-profit...
-
Since not-for-profit businesses are expected to provide a social value in addition to an economic benefit, project analysis must consider social value along with expected cash flows. The summation of...
-
a. Without access to tax-exempt debt, all of the benefits to using debt for a not-for-profit firm would disappear. Thus, in accordance with MM capital structure theory, and considering financial...
Study smarter with the SolutionInn App