How much total revenue is recognized from the contract in 20x1?
On July 1, 20x1, W Co grants a franchisee the right to sell W Co’s products in a specific market over a period of 10 years. The franchise contract requires an upfront fee of P800,000 which includes P100,000 for equipment that W Co will provide for the franchisee. The amount reflects the stand-alone selling price of the equipment. In addition, the franchisee will pay a 10% sales-based royalty. W Co. has granted similar rights to other franchisees in other locations. W Co regularly undertakes activities that promote the brand name nationally. W delivers the equipment to the franchisee on July 15, 20x1. The franchisee starts selling the products on August 1, 20x1 and reports total sales of P600,000 for the year. How much total revenue is recognized from the contract in 20x1?
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