On July 1, 2021, the franchisor company entered into a franchising agreement with a franchisee for...
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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
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Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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