JANE creates a franchise for the sale of a particular product. JANE incurs P600,000 initial direct costs for each franchise granted. At December 31, 20x6, JANE granted the following people franchises that have open accounts with JANE. ANNA BETY CHERRY DANA Cash paid (down payment) Note unpaid (face P1,000,000) Services completed Probability of collection Continuing franchise fee Period of refund 200,000 200,000 200,000 910,000 200,000 700,000 400,000 550,000 25% 10% 95% 100% Likely Unlikely 1% of NI Likely 1% of NI 12/30/2016 12/30/2016 Unlikely 1% of NI 1% of NI 1/31/2017 2/28/2017 What is the total revenue to be recognized by JANE on December 31, 20x6?
Q: How much total revenue is recognized from the contract in 20x1?
A:
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: Burger King granted a franchise to Shakers where Shakers will have to pay franchise fee of…
A: Given for question one Shakers where Shakers will have to pay franchise fee of P5,000,000 payable…
Q: On July 1, 20x1, Wash Co. grants a franchise the right to sell Wash Co.’s products in a specific…
A: Revenue recognition is the concept which explains that revenue should be recognized when the…
Q: A franchisor, charges an initial franchise fee of P920,000, with P200,000 paid when the agreement is…
A: Solution: The amount of revenue from franchise fees is = Present value of franchise payments
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: 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: 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: franchise for the sale of a particular product. JANE incurs P600,000 initial direct costs for each…
A: Given:
Q: initial franchise fee
A: The initial franchise fee has to be recognized as revenue only upon the performance of all…
Q: On January 2, Frazier Company purchased a restaurant franchise for $720,200. The terms of the…
A: Solution: Journal entries related to the franchise during the year are as under:
Q: New Era Network Associates has a fi ve-year license to provide networking support services to a…
A: This is a long term contract which spans for more than one accounting period.
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: Solve the following problem in good accounting form. Burger King granted a franchise to Shakers…
A: The franchise is the right to sell the products or do service of a big renowned company. The company…
Q: Each of Picha Pie Co. 21 new franchisee contracted to pay an initial franchisee of 30,000. By…
A: Deferred or unearned revenue occurs when an organization receives cash for its services but does not…
Q: Mean Dones and Jeremie Jane Roldan Inc. charges an initial franchise fee of P920,00, with P200,000…
A: This question deals with how much revenue should be recorded as the revenue from franchise fee.…
Q: le when the agreement was signed and the balance in five annual payments of P8,000 each. Tam's is…
A: In franchise business, owner of the business which has its business market acceptability along with…
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: McDolibee operates and franchises restaurants around the world. On January 1, 20x1, McDolibee…
A: On 01.01.20x1, Mc Dolibee entered into franchise agreement with a franchisee. Non refundable fees =…
Q: On January 1, 20x1, LOMI Ko charges an initial fee of P8,000,000 for the franchise, with P1,600,000…
A: Lets understand the basics. When franchise agreement made between the franchiser and franchisee then…
Q: Chipotle Inc. grants franchisees the right to operate a franchise using the company’s name, menu,…
A: A Promise contained in the contract to transfer the customer Goods or Services that are distinct. a…
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: TopChop sells hairstyling franchises. TopChop receives $50,000 from a new franchisee for providing…
A:
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: 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: On January 1, 20x1, LOMI Ko charges an initial fee of P8,000,000 for the franchise, with P1,600,000…
A: Lets understand the basics. When franchise agreement made between the franchiser and franchisee then…
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: On January 1, 2014, Heart Company signed an agreement to operate as a franchisee of Ace Company for…
A: Acquisition cost of franchise = cash paid + Present value of future 4 annual payments discounted at…
Q: Pita Pal sells fast-food franchises. Pita Pal receives $79,000 from a new franchisee for providing…
A: Revenue recognition is an accounting principle that helps in knowing when can a revenue be…
Q: Liezl Sangalang Malalaban, Inc. charges an initial franchise fee of P90,000 broken down as follows.…
A: Journal entry - Recording the business transactions in accounting books for the first time. The…
Q: Paris paid Cherry $333,333 on 12/31/2020 for the exclusive right to market a particular product…
A: Net income refers to the amount attained after deducting the sales from cost of goods sold, selling,…
Q: JANE creates a franchise for the sale of a particular product. Jane incurs P600,000 initial direct…
A: Only likely portion of cash to be received in to be recognized
Q: A B C D Cash paid (Down payment) 200,000 200,000 200,000 200,000 Note unpaid (Face…
A: Given: The data is given as,
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: 1. On January 1, 20x4, Drexler signed an agreement to operate as a franchisee of Houston Copy…
A: Answer - Working Note - Calculation of carrying amount of the franchise on December 31, 20x4 -…
Q: Chipotle Inc. grants franchisees the right to operate a franchise using the company’s name, menu,…
A: The initial franchise fees of $250000 will be recorded equally over the period of franchise i.e. 5…
Q: Fred Esquillo, Inc charges an initial franchise fee of P90,000 broken down as follows: Rights to…
A: A franchise is a technique wherein the brand name and know-how of a successful business are shared…
Q: 3. Paris paid Cherry $333,333 on 12/31/2020 for the exclusive right to market a particular product…
A: A patent is an intangible asset, that gives the business a legal right to manufacturing and sell a…
Q: The franchisor charges an initial franchise fee of P110,000 broken down as follows: Right to trade…
A: A frenchise fees is paid by franchisee to franchisor for using the entity's…
Q: Pita Pal sells fast-food franchises. Pita Pal receives $82,000 from a new franchisee for providing…
A: Given in the question: Rachel purchased franchisee on March 1, 2021. Training, equipment and…
Q: Jan. 1, 2020, ABC Corporation entered into a franchise agreement with a P570,000 cash payment as…
A: Revenue recognition : revenue recognition for customer services will be recognise when the services…
Q: 1. On January 1, 20x4, Drexler signed an agreement to operate as a franchisee of Houston Copy…
A: Intangible Related Expenses for the end of December 31 20x4 Franchise and Licenses Down…
Q: On January 1, 20x1, Marc Company enters into a contract with a customer to transfer a license.…
A: Transaction price refers to the consideration amount which the entity expects to get for…
Q: ABC Franchisor entered into a franchise contract that will allow the franchisee to use ABC's…
A: Franchise: A method of distributing goods or services that involves a franchisor, who establishes…
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: AA, BB, and CC agree to sell construction tools for a period of one month. AA agrees to construct a…
A: Joint operation: When two or more people or entities tie up to perform a business operation for a…
Q: On January 1, 20x1, Sunbathe Co. enters into a contract with a customer to transfer a license. The…
A:
Q: Collins, Inc., entered into a 10-year franchise agreement with an individual. For an initial…
A: The franchisor can generate revenue by way of initial franchise fees or continuing franchise fees.…
What is the total revenue to be recognized by JANE on December 31, 20x6?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- Rix Company sells home appliances and provides installation and service for its customers. On April 1, 2019, a customer purchased a dishwasher that Rix normally sells for 1,000. In addition, the customer purchased the installation service and a 3-year service contract, with stand-alone selling prices of 200 and 400, respectively. Because the customer purchased all three items as a bundle, Rix charged the customer 1,400. Required: 1. How should the transaction price be allocated among the products? 2. Prepare the journal entries to recognize revenue related to each product in 2019.JANE creates a franchise for the sale of a particular product. JANE incurs P600,000 initial direct costs for each franchise granted. At December 31, 20x6, JANE granted the following people franchises that have open accounts with JANE. (image) What is the total revenue to be recognized by JANE on December 31, 20x6?Fred Esquillo, Inc charges an initial franchise fee of P90,000 broken down as follows:Rights to trade name, market area, and proprietary know-how . . . . . . . . . P40,000Training services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,500Equipment (cost of P10,800) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,500Total initial franchise fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P90,000Upon signing of the agreement, a payment of P40,000 is due. Thereafter, two annual payments ofP30,000 are required. The credit rating of the franchisee is such that it would have to pay interest of8% to borrow money. The franchise agreement is signed on August 1. 20x7. Assuming that no futureservices are required by the franchisor once the franchise begins operations, the entry on November1, 20x7 would include-A credit to Unearned Franchise Revenue for P40,000.-A debit to…
- Sr. Juan Inc. a franchisor, entered into a franchise agreement with Mang Pedro, franchisee, on March 31, 20x1. The total franchise fee is P500,000 of which P100,000 is payable upon signing and the balance was represented by a 10% interest bearing note payable in four equal annual installments. The down payment is non-refundable and represent a fair measure of service already performed. The five year franchise license provides Mang Pedro the right to use because the license to which Mang Pedro has rights will not change over the term of the license. On April 10, 20x1, Sr. Juan transfers the rights and provided all the necessary services required in the contract. Mang Pedro started its operation on April 12, 20x1. Case 1: What is the total revenue to be recorded on July 1, 20x1? Case 2: Which of the following statement is correct? a. A credit to interest income amounting to P13,333 b. A credit to Franchise Revenue of P100,000 on April 10, 20x1 c. A credit to Franchise Revenue…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…
- 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…At the beginning of the year. Happy Haus got the franchise of Hogan House, a known steak house of upscale patronage. The franchise agreement required a P5,000,000 franchise fee payable P1.000.000 upon signing of the franchise and the balance in four annual installments starting the end of the current year. The existing discount rate is 12. The fees once paid are not refundable. The franchise may be canceled subject to the provisions of the agreement. Should there be unpaid franchise fee attributed to the balance of main fee (P5,000,000). the same would become due and demandable upon cancellation. Further, the franchisor is entitled to a 5% fee on gross sales payable monthly within the first ten days of the following month. The Credit Investigation Bureau rated Happy as A+ credit rating. The balance of the franchise fee was guaranteed by a commercial bank. The first year of operations yielded gross sales of P90 million. Hogan's earned franchise fees from Happy for the first year of…Pita Pal sells fast-food franchises. Pita Pal receives $82,000 from a new franchisee for providing initial training, equipment, and furnishings that together have a stand-alone selling price of $82,000. Pita Pal also receives $38,100 per year for use of the Pita Pal name and for ongoing consulting services (starting on the date the franchise is purchased). Rachel became a Pita Pal franchisee on March 1, 2021, and on May 1, 2021 Rachel had completed training and was open for business. How much revenue in 2021 will Pita Pal recognize for its arrangement with Rachel?
- Mean Dones and Jeremie Jane Roldan Inc. charges an initial franchise fee of P920,00, with P200,000paid when the agreement is signed and the balance in five annual payments. The present value ofthe future payments, discounted at 10%, is P545,872. The franchise has the option to purchaseP120.000 of equipment for P96,000, franchise operations already stared. The amount of revenuefrom franchise fees is:-P200.000-P721.872-P745,872-P920,000Manong 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?