How much is Vancouver Company's amortization expense and franchise fee expense for the year 2020?

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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On April 1, 2020, Vancouver Company purchased from Sunbucks Company (franchisor), a franchise to operate a 24-hours cafe at Eastwood for P3,125,000. In addition, the franchise contract stipulates that Vancouver shall pay Sunbucks Company 5% of its sales exceeding P5,000,000, payable at the end of the month following the end of every quarter. For the nine months ended December 31, 2020, Vancouver Company's sales amounted to P8,500,000. Vancouver estimates that the useful life of the franchise is 10 years. It is the company's policy to amortize to the nearest month.

How much is Vancouver Company's amortization expense and franchise fee expense for the year 2020?

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