How much total revenue should the entity recognize from the contract in 20x1?
Q: Nori Restaurant sold a fast-food restaurant franchise to Irish. The sale agreement, signed on…
A: Given, Down payment = P 200,000 Installment = P 100,000 Commission charge on sales = 10% Sales on…
Q: Sunland Inn charges an initial fee of $ 2,448,000 for a franchise, with $ 489,600 paid when the…
A: The advertising fee is paid for 5 years i.e., for 60 months. Advertising fee for 60 months = 60 x…
Q: urant. In addition, the agreement required the franchisee to pay 8% royalty based on its gross…
A: A lease is a type of contract in which the actual and legal owner of the asset gives the right to…
Q: Sr. Juan Inc. a franchisor, entered into a franchise agreement with Mang Pedro, franchisee, on March…
A: Franchise Agreement The purpose of providing the franchise agreement is to use the brand and name of…
Q: On Nov. 1, 20x1, DRINK Co. entered into a franchise contract with TIPPLE Co. The franchise agreement…
A: The franchise is a type of contract in which three exists two parties which are franchisor and…
Q: On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial…
A: It is an accounting principle that states the conditions in which the revenue should be recognized…
Q: n January 1, 20x1, an entity grants a franchisee the right to operate a restaurant in a specific…
A: Revenue is the amount that a company earns from normal activities conducted by the business for…
Q: On January 1, 2021, Entity A granted a franchise to Entity B involving a food stall. The franchise…
A: A franchise is an agreement between the franchisor and franchisee in which license is granted to…
Q: Dominador's Pizza Inc. enters into a franchise agreement on December 31, 20x7 giving Doming Corp.…
A: Answer - Part 8 - Correct Option is Option - A Zero . Because, As of December 31, 20x7, Revenue…
Q: 1. ABC Island, Inc. charges an initial franchise fee of ₱75,000 for the right to operate as a…
A: Revenue refers to the amount collected or acquired through sale of goods and services. It is…
Q: On June 1, 2020, Mills Company sells $200,000 of shelving units to a local retailer, ShopBarb, which…
A: Given information is: On June 1, 2020, Mills Company sells $200,000 of shelving units to a local…
Q: prepare journal entries
A: Intangible assets include patent rights that are acquired for a long term,say 20 years in this case.…
Q: ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC…
A: Franchise is defined as the business form that includes the existing business allow the third party…
Q: On January 1, 2022, Annibelle Company received a grant of P9,000,000 from the foreign government in…
A: Government grants are grants received by the company from government in monetary form, where these…
Q: ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC…
A: Franchise is defined as the form of the business that includes the business which is in operation or…
Q: Prepare journal entries from 2020 to 2023.
A:
Q: Epsilon is an entity which prepares financial statements, in accordance with International Financial…
A: Purchase of machine: The cost of purchasing the machine from the foreign supplier (20 million…
Q: T: | Bank | Payable | Receivable | Interest expense | Interest revenue | Inventory | PPE | | Asset…
A: Journal: Journal is considered as a book of original entry because all the transactions that have…
Q: Monitor Muffler sells franchise arrangements throughout the United States and Canada. Under a…
A: Franchise arrangement and performance obligation: The franchisor has multiple performance…
Q: Baker Company sold consumer products that are packaged in boxes. The entity offered an unbreakable…
A: Formula: Estimated redemption units = Sales units x redemption percentage Multiplying sales units…
Q: . On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an…
A: Revenue: Revenue can be defined as the inflow of cash within the organization resulting from the…
Q: ent year, Goldilocks Inc. signed an agreement to operate as a franchise of Cafe for an initial…
A: Acquisition cost refers to the expenses born by an entity in acquiring an asset.
Q: On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial…
A: Revenue ( CANOROUS ) = 400000 + 10%*800000 = ₱480000
Q: On June 1, 2020, Bridgeport Company sells $172,000 of shelving units to a local retailer, ShopBarb,…
A: A bill and hold transaction is one in which the seller does not ship goods to the buyer, but still…
Q: Kami, Inc. charges an initial franchise fee of P500,000 for the right to operate to operate as a…
A: The franchise revenue is recognized at the time of providing service and the payment of the…
Q: Burger King granted a franchise to Shakers where Shakers will have to pay franchise fee of…
A: The franchise royalty is 5% of the gross amount of sales of the previous month and other franchise…
Q: ABC Company, a department store operates a customer loyalty program.The entity grants program…
A: Given data, Sales =P10,000,000 Fair value of products sold =P9,000,000 Fair value of reward points…
Q: ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC…
A: Franchise is a method of distributing product or services between two parts.it includes two parts 1)…
Q: Nori Restaurant sold a fast-food restaurant franchise to Irish. The sale agreement, signed on…
A: Step 1: Calculate the present value of two annual payments as follows: MS-Excel -->Formulas…
Q: On Jan 1, 2021, an entity grants a franchisee the right to operate a restaurant using its trade name…
A: Franchise business is letting other entities to use the brand image of the entity. For this, the…
Q: Max Co. restaurant sold a fast-food restaurant franchise to Irish for a 5-year term. The sale…
A: A lease is a type of contract in which the actual and legal owner of the asset gives the right to…
Q: max co. restaurant sold a fast-food restaurant franchise to irish for 5-year term. the sale…
A: It is given that :down payment for franchise – P 100,000 Annual payment – P 50,000 No of payments –…
Q: Epsilon is an entity which prepares financial statements, in accordance with International Financial…
A:
Q: The Krispy Donuts franchise has agreements with 100 franchisees across the United States to operate…
A: Particulars Amount Franchise Deferred Revenue 800000 Less: Equipment sale 96000 Balance…
Q: On Jan. 1, 2020, ABC Corporation entered into a franchise agreement with a P570,000 cash payment as…
A: Franchise is type of business arrangement when rights of use brands and patents are transferred for…
Q: On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial…
A: Franchise is a marketing concept adopted by organizations as a strategy for business expansion. It…
Q: 15. On Jan. 1, 20x1, Hurt Co. entered into a franchise agreement with Hero Co. The franchise…
A: Correct option is C. 700,000 Hurt co. would recognize P 700,000 as revenue in 20x1.
Q: Brilliant Company sold a franchise to sell its products for P5,000,000 on January 1, 2021. The…
A: Lets understand the basics. When franchisor give franchisee then some intial payment and annual…
Q: On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial…
A: On December 01, 20x1 CANOROUS Co. granted a franchise right to MELODIOUS Inc. Initial fees = P400000…
Q: on January 1, 20x1, Baguio Beans, a well-known basketball team' of its name and logo to a customer.…
A: Royalty: It is the legal contract for the payment against the use of its originally created asset…
Q: Manong Nilaga, a renowned franchisor under McJabi Group of Companies, sells franchise arrangements…
A: A franchise is an agreement in which there are two parties involved which is the franchisor (who is…
Q: On October 1, 2018, the Submarine Sandwich Company entered into a franchise agreement with an…
A:
Q: The Krispy Donuts franchise has agreements with 100 franchisees across the United States to operate…
A: As per the honor code, we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit…
Q: On January 1, 2021, Annibelle Company received a grant of P9,000,000 from the foreign government in…
A: Government grants are the amounts or assistance that is received by organisation from the…
Q: ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC…
A: Explanation: Franchise fee 1000,000 Direct cost (30, 000 + 3,00,000) (330,000) Deferred…
Q: On January 1, 20x1, Sunbathe Co. enters into a contract with a customer to transfer a license. The…
A:
On January 1, 20x1, an entity grants a franchisee the right to operate a restaurant in a specific market using the entity’s brand name, concept and menu for a period of ten years. The entity has granted others similar rights to operate this restaurant concept in other markets. The entity commonly conducts national advertising campaigns, promoting the brand name, and restaurant concept generally. The franchisee will also purchase kitchen equipment from the entity. The entity will receive ₱950,000 upfront (₱50,000 for the kitchen equipment and ₱900,000 for the franchise right) plus a royalty, paid quarterly, based on 4% of the franchisee’s sales over the life of the contract. The ₱50,000 amount reflects the stand-alone selling price of the kitchen equipment. The entity delivers the kitchen equipment to the customer on February 1, 20x1. The customer commences business operations on April 1, 20x1 and reports total sales of ₱5,000,000 for the year. How much total revenue should the entity recognize from the contract in 20x1?
a. 117,500
b. 317,500
c. 340,000
d. 1,150,000
Step by step
Solved in 2 steps
- On January 1, 20x1, an entity grants a franchisee the right to operate a restaurant in a specific market using the entity’s brand name, concept and menu for a period of ten years. The entity has granted others similar rights to operate this restaurant concept in other markets. The entity commonly conducts national advertising campaigns, promoting the brand name, and restaurant concept generally. The franchisee will also purchase kitchen equipment from the entity. The entity will receive ₱950,000 upfront (₱50,000 for the kitchen equipment and ₱900,000 for the franchise right) plus a royalty, paid quarterly, based on 4% of the franchisee’s sales over the life of the contract. The ₱50,000 amount reflects the stand-alone selling price of the kitchen equipment. The entity delivers the kitchen equipment to the customer on February 1, 20x1. The customer commences business operations on April 1, 20x1 and reports total sales of ₱5,000,000 for the year. How much total revenue should the entity…On July 1, 20x1, Wash Co. grants a franchisee the right to sell Wash Co.’s products in a specificmarket over a period of 10 years. The franchise contract requires an upfront fee of ₱800,000, whichincludes ₱100,000 for equipment that Wash Co. will provide to the franchisee. The amount reflects the stand-alone selling price of the equipment. In addition, the franchisee will pay a 10% sales-based royalty. Wash Co. has granted similar rights to other franchisees in other locations. Wash Co. regularly undertakes activities that promote the brand name nationally. Wash delivers theequipment to the franchisee on July 15, 20x1. The franchisee starts selling the products on August1, 20x1 and reports total sales of ₱600,000 for the year. How much total revenue is recognized fromthe contract in 20x1?a. 860,000 c. 213,259b. 760,000 d. 189,167Manong Nilaga, a renowned franchisor under McJabi Group of Companies, sells franchise arrangements to individual businessmen. Under a franchise agreement, Manong Nilaga receives P10,000,000 in exchange for satisfying the following separate performance obligations: franchisees have a ten-year right to operate as a Manong Nilaga restaurant. franchisor submits a feasibility study for the strategic location of the business franchisees receive initial training and certification, and franchisees receive necessary specialized equipment. The stand-alone selling price are P500,000 for the initial training and certification, and P1,500,000 for the specialized equipment. The feasibility study usually costs P200,000 for Manong Nilaga. The franchisor expects a normal profit of 25% on most of its services. The franchisor also estimates the stand-alone selling price of the ten-year right to operate as a Manong Nilaga restaurant using the residual approach. Manong Nilaga received P2,000,000 on…
- Collins, Inc., entered into a 10-year franchise agreement with an individual. For an initial franchise fee of$40,000, Collins agrees to assist in design and construction of the franchise location and in all other necessarystart-up activities. Also, in exchange for advertising and promotional services, the franchisee agrees to pay continuing franchise fees equal to 5% of revenue generated by the franchise. When should Collins recognize revenuefor the initial and continuing franchise fees?Dominador’s Pizza Inc. enters into a franchise agreement on December 31, 20x7, giving Dian Jaycerette the right to operate as a franchisee of Dominador’s Pizza for 5 years. Dominador’s charges Dian Jaycerette an initial franchise fee of P570,000 for the right to operate as a franchisee. Of this amount, P228,000 is payable when Dian Jaycerette signs the agreement, and the balance is payable in five annual payments of P68,400 each on December 31. The credit rating of Dian Jaycerette indicates that money can be borrowed at 8%. The present value of an ordinary annuity of five annual receipts of P68,400 each discounted at 8% is P272,916. The unearned interest income or discount on notes amounted to P69,084 [(P68,400 x 5 years) less P272,916] represents the interest revenue to be accrued by Dominador’s Pizza Inc. over the payment period. The transaction price then amounted to P500,916 computed as follows: Down payment.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .…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?
- Pizza Pie Inc. entered into a franchise agreement on December 31, 2029, giving Freshly Bake Corp. the right to operate as a franchise of Pizza Pie for 5 years. Pizza Pie charged Freshly Bake an initial franchise fee of P50,000 for the right to operate as a franchisee. Of this amount P20,000 is payable when the food fight signs the agreement, and the note balance is payable in five annual payments of P6,000 each starting on December 31, 2020, as part of the arrangement. Pizza helps locate the site, negotiate the lease or purchase of the site, supervise the construction activity, and provide employee training and the equipment necessary to be a distributor of its products. Similar training services and equipment are sold separately. Freshly Bake also promises to pay ongoing royalty payments of 1% of its annual sales (payable each Jan. 31 of the following year) and is obliged to purchase products from pizza at its current stand-alone selling price at the same time of purchase. The credit…On January 1, 20x4 Ehtelmea Dulva Dairy Treats, Inc. entered into a franchise agreement with acompany allowing the company to do business under Ethelmea Dulva Dairy Treats’s name. EthelmeaDulva Dairy Treats had performed all required services by January 1, 20x4, and the franchisee paidthe initial franchisee fee of P560,000 in full on that date. The franchise agreement specifies that thefranchisee must pay a continuing fee of P48,000 annually, of which 20% must be spent on advertisingby Ethelmea Dulva Dairy Treats. What entry should Ethelma Dulva Dairy Treats make on January 1,Initial franchise fee and the continuing franchise fee for 20x4?DR Cash 608,000CR Franchise Fee Revenue 560,000CR Unearned Franchise revenue 48,000 DR Cash 608,000CR Unearned franchise revenue 608,000 DR Cash 608,000CR Franchise revenue 560,000CR Unearned franchise revenue 38,400CR Revenue from Continuing Franchise Fees 9,600 DR Prepaid advertising 9,600DR Notes receivable 608,000CR Franchise revenue 560,000CR…On November 1, 2019, a newly established manufacturing outfit paid cash to acquire a patent for P1,200,000, a copyright for P750,000, and a franchise for P60,000. The patent expires at the end of 2020, has a total legal life of 20 years in the Philippines and is expected to produce benefits only for 5 years. The copyright has a service life of 10 years. The franchise allows the company to be exclusive sales agent for two years effective November 1, 2019. The amortization amount for the intangibles in 2023 is b. 65, 500 Someone give me a solution for this answer.
- On October 1, 2018, the Submarine Sandwich Company entered into a franchise agreement with an individual.In exchange for an initial franchise fee of $300,000, Submarine will provide initial services to the franchisee toinclude assistance in design and construction of the building, help in training employees, and help in obtainingfinancing. Ten percent of the initial franchise fee is payable on October 1, 2018, with the remaining $270,000payable in nine equal annual installments beginning on October 1, 2019. These installments will include interestat an appropriate rate. The franchise opened for business on January 15, 2019.Required:Assume that the initial services to be performed by Submarine Sandwich subsequent to October 1, 2018, are substantial and that collectibility of the installment receivable is reasonably certain. Substantial performance of theinitial services is deemed to have occurred when the franchise opened. Prepare the necessary journal entries forthe following dates…ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC receives 1,000,000 in exchange for satisfying the following separate performance obligations: franchisees have a ten-year right to operate as an ABC retail establishment once it started its operation; franchisees receive an ABC building and necessary equipment; franchisees receive initial training and certification as an ABC retail. The 1,000,000 is payable with a down payment of P500,000 on August 1, 2021 with the balance will be payable in five equal annual payments with an interest of 10% starting January 1, 2022. The stand-alone selling price of the initial training and certification is P100,000 and P400,000 for the building and equipment. ABC estimates that the stand-alone selling price of the ten-year right to operate as a franchise using the residual approach. ABC received P500,000 on August 1, 2021 from DDD, which represent the collection from the training, building and…ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC receives 1,000,000 in exchange for satisfying the following separate performance obligations: franchisees have a ten year right to operate as an ABC retail establishment once it started its operation; franchisees receive an ABC building and necessary equipment; franchisees receive initial training and certification as an ABC retail. The 1,000,000 is payable with a down payment of P500,000 on August 1, 2021 with the balance will be payable in five equal annual payments with an interest of 10% starting January 1, 2022. The stand-alone selling price of the initial training and certification is P100,000 and P400,000 for the building and equipment. ABC estimates that the stand-alone selling price of the ten-year right to operate as a franchise using the residual approach. ABC received P500,000 on August 1, 2021 from DDD, which represent the collection from the training, building and…