Casual Company entered in a franchising contract with a franchisee on January 5, 2021. The contract calls for an initial franchise fee of P2,000,000 for a period of 10 years. Cash of P750,000 was paid by the franchisee at the date the contract was signed. The balance was agreed to be payable in five semi-annual installments beginning June 30, 2021, covered by a 10% non-interest-bearing note. By November 17, 2021, the initial services required were substantially performed for P500,000 and the franchisee has started operations on December 21, 2021. The franchisee’s credit rating indicates that it can borrow money at 10% for loan of the same type. (Round off the PV factor to four decimal places, then do not round off during the computation) 1. How much is the Franchise Revenue to be recognized in 2021?
Casual Company entered in a franchising contract with a franchisee on January 5, 2021. The contract calls for an initial franchise fee of P2,000,000 for a period of 10 years. Cash of P750,000 was paid by the franchisee at the date the contract was signed. The balance was agreed to be payable in five semi-annual installments beginning June 30, 2021, covered by a 10% non-interest-bearing note. By November 17, 2021, the initial services required were substantially performed for P500,000 and the franchisee has started operations on December 21, 2021. The franchisee’s credit rating indicates that it can borrow money at 10% for loan of the same type. (Round off the PV factor to four decimal places, then do not round off during the computation)
1. How much is the Franchise Revenue to be recognized in 2021?
Step by step
Solved in 2 steps
How about these questions:
1. how much is the Net Income (Loss) in 2021?
2. assuming the collectability of the note is uncertain, how much is the Franchise Revenue to be recognized in 2021?
by Bartleby ExpertHow about these questions:
1. How much is the Interest Revenue to be recognized in 2021?
2. How much is the Net Income (Loss) in 2021?
3. Assuming the collectability of the note is uncertain, how much is the Franchise Revenue to be recognized in 2021?
by Bartleby Expert
