Integrity Pizza charges initial franchise fee of P500,000 for the right to operate as a franchisee of Integrity Pizza. Of this amount, P100,000 is payable when the arrangement is signed and the balance is payable in five annual payments of P80,000 each. In return for the initial franchise fee, the franchisor will help locate the site, negotiate the lease or purchase of the site, supervise the construction activity, and provide the bookkeeping services. The credit rating of the franchisee indicates that money can be borrowed at 8%. (Round off present value factor to two decimal places.) How much is the contract liability at the inception of the contract?
Integrity Pizza charges initial franchise fee of P500,000 for the right to operate as a franchisee of Integrity Pizza. Of this amount, P100,000 is payable when the arrangement is signed and the balance is payable in five annual payments of P80,000 each. In return for the initial franchise fee, the franchisor will help locate the site, negotiate the lease or purchase of the site, supervise the construction activity, and provide the bookkeeping services. The credit rating of the franchisee indicates that money can be borrowed at 8%. (Round off present value factor to two decimal places.) How much is the contract liability at the inception of the contract?
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter8: Revenue Recognition, Receivables, And Advances From Customers
Section: Chapter Questions
Problem 52P
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Integrity Pizza charges initial franchise fee of P500,000 for the right to operate as a franchisee of Integrity Pizza. Of this amount, P100,000 is payable when the arrangement is signed and the balance is payable in five annual payments of P80,000 each. In return for the initial franchise fee, the franchisor will help locate the site, negotiate the lease or purchase of the site, supervise the construction activity, and provide the bookkeeping services. The credit rating of the franchisee indicates that money can be borrowed at 8%. (Round off present value factor to two decimal places.)
How much is the contract liability at the inception of the contract?
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