9. On January 1, 20X2, ABC Company signed an agreement to operate as franchisee of XYZ Company for an initial franchise fee of P 30,000,000. Of this amount, P 10,000,000 was paid when the agreement was signed and the balance is payable in equal annual payment of P 5,000,000 beginning December 31, 20X2. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. ABC’s credit rating indicates that it can borrow money at 12% for a loan of this type. Determine the cost of the franchise. (Use 4-decimal PVF)

9. On January 1, 20X2, ABC Company signed an agreement to operate as franchisee of XYZ Company for an initial franchise fee of P 30,000,000. Of this amount, P 10,000,000 was paid when the agreement was signed and the balance is payable in equal annual payment of P 5,000,000 beginning December 31, 20X2. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. ABC’s credit rating indicates that it can borrow money at 12% for a loan of this type. Determine the cost of the franchise. (Use 4-decimal PVF)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 7C: On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial...

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