McDolibee operates and franchises restaurants around the world. On January 1, 20x1, McDolibee entered into a franchise agreement with a franchisee. As part of its franchise agreement, McDolibee requires the franchise to pay a nonrefundable upfront franchise fee of P190,000 upon opening a restaurant and ongoing payment of royalties, based on 10% of franchisee's sales. As part of the franchise agreement, McDolibee provides pre-opening services, including supply and installation of cooking equipment and cash registers, valued at P60,000, which is the stand-alone selling price of the pre-opening services. In addition, the franchise agreement includes a license of Intellectual Property such as McDolibee's trademark and trade name to the franchisee. McDolibee has determined the stand-alone selling price of the license is P140,000. The franchise agreement. On January 1, 20x1, the franchisee paid the nonrefundable upfront franchise fee of P190,000 to McDolibee. McDolibee evaluates the arrangement and determines if it meets the criteria to be accounted for as a contract with the customer under PFRS 15. McDolibee determines its pre-opening services and license of Intellectual property are each distinct, and therefore, need to be accounted for as a separate performance obligation. As of December 31, 20x1, McDolibee already satisfied its performance obligation to supply and install cooking equipment and cash registers to the franchisee. For the year ended December 31, 20x1, the franchisee reported sales revenue of P200,000. REQUIRED: Under PFRS 15, compute the amount to be recognized for the year ended December 31, 20x1. 1. Total franchise revenue 2. Unearned franchise revenue
McDolibee operates and franchises restaurants around the world. On January 1, 20x1, McDolibee entered into a franchise agreement with a franchisee. As part of its franchise agreement, McDolibee requires the franchise to pay a nonrefundable upfront franchise fee of P190,000 upon opening a restaurant and ongoing payment of royalties, based on 10% of franchisee's sales. As part of the franchise agreement, McDolibee provides pre-opening services, including supply and installation of cooking equipment and cash registers, valued at P60,000, which is the stand-alone selling price of the pre-opening services. In addition, the franchise agreement includes a license of Intellectual Property such as McDolibee's trademark and trade name to the franchisee. McDolibee has determined the stand-alone selling price of the license is P140,000. The franchise agreement. On January 1, 20x1, the franchisee paid the nonrefundable upfront franchise fee of P190,000 to McDolibee. McDolibee evaluates the arrangement and determines if it meets the criteria to be accounted for as a contract with the customer under PFRS 15. McDolibee determines its pre-opening services and license of Intellectual property are each distinct, and therefore, need to be accounted for as a separate performance obligation. As of December 31, 20x1, McDolibee already satisfied its performance obligation to supply and install cooking equipment and cash registers to the franchisee. For the year ended December 31, 20x1, the franchisee reported sales revenue of P200,000. REQUIRED: Under PFRS 15, compute the amount to be recognized for the year ended December 31, 20x1. 1. Total franchise revenue 2. Unearned franchise revenue
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
Related questions
Question
Transcribed Image Text:McDolibee operates and franchises restaurants around the world. On January 1, 20x1, McDolibee entered
into a franchise agreement with a franchisee. As part of its franchise agreement, McDolibee requires the
franchise to pay a nonrefundable upfront franchise fee of P190,000 upon opening a restaurant and ongoing
payment of royalties, based on 10% of franchisee's sales. As part of the franchise agreement, McDolibee
provides pre-opening services, including supply and installation of cooking equipment and cash registers,
valued at P60,000, which is the stand-alone selling price of the pre-opening services. In addition, the franchise
agreement includes a license of Intellectual Property such as McDolibee's trademark and trade name to the
franchisee. McDolibee has determined the stand-alone selling price of the license is P140,000. The franchise
agreement. On January 1, 20x1, the franchisee paid the nonrefundable upfront franchise fee of P190,000 to
McDolibee.
McDolibee evaluates the arrangement and determines if it meets the criteria to be accounted for as a contract
with the customer under PFRS 15. McDolibee determines its pre-opening services and license of Intellectual
property are each distinct, and therefore, need to be accounted for as a separate performance obligation. As
of December 31, 20x1, McDolibee already satisfied its performance obligation to supply and install cooking
equipment and cash registers to the franchisee. For the year ended December 31, 20x1, the franchisee
reported sales revenue of P200,000.
REQUIRED:
Under PFRS 15, compute the amount to be recognized for the year ended December 31, 20x1.
1. Total franchise revenue
2. Unearned franchise revenue
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT