Burger King granted a franchise to Shakers where Shakers will have to pay franchise fee of P5,000,000 payable in four equal annual installments with the first payment starting on the date of signing the contract. The franchisee was to pay 5% of gross sales of the preceding month. Should the operations of the outlet prove to be unprofitable, the franchise may be cancelled with whatever obligation owing Burger King, in connection with the P5,000,000 franchise fee waived. If the first year of operations generated a gross sales of P1,340,000, what amount of franchise fee did Burger King earn?
Burger King granted a franchise to Shakers where Shakers will have to pay franchise fee of P5,000,000 payable in four equal annual installments with the first payment starting on the date of signing the contract. The franchisee was to pay 5% of gross sales of the preceding month. Should the operations of the outlet prove to be unprofitable, the franchise may be cancelled with whatever obligation owing Burger King, in connection with the P5,000,000 franchise fee waived. If the first year of operations generated a gross sales of P1,340,000, what amount of franchise fee did Burger King earn?
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
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Burger King granted a franchise to Shakers where Shakers will have to pay franchise fee of P5,000,000 payable in four equal annual installments with the first payment starting on the date of signing the contract. The franchisee was to pay 5% of gross sales of the preceding month. Should the operations of the outlet prove to be unprofitable, the franchise may be cancelled with whatever obligation owing Burger King, in connection with the P5,000,000 franchise fee waived. If the first year of operations generated a gross sales of P1,340,000, what amount of franchise fee did Burger King earn?
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