Please present your solutions in good accounting form, thank you! JANE creates a franchise for the sale of a particular product. JANE incurs P600,000 initial direct costs for each franchisegranted. At December 31, 20x6, JANE granted the following people franchises that have open accounts with JANE.ANNAВЕTYCHERRYDANACash paid (down payment)Note unpaid (face P1,000,000)Services completedProbability of collectionContinuing franchise fee200,000200,000200,000200,000700,000400,000910,000550,00025%10%95%100%LikelyUnlikelyUnlikelyLikely1% of NI1% of NI1% of NI1% of NIPeriod of refund1/31/20172/28/2017 12/30/2016 12/30/2016What is the total revenue to be recognized by JANE on December 31, 20x6?

Calculation of total revenue to be recognized by JANE on December 31, 20x6: Cash paid by each…

Answered: ng fo | bartleby

Business

Accounting

ng fo

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

See similar textbooks

Similar questions

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…
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…
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…
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-P920,000
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?
Liezl Sangalang Malalaban, 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, 20x8, and the franchisecommences operation on November 1, 20x8. Assume that the total training fees includes trainingservices for the period leading up to the franchise opening (P5,500 value) and for 3…
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?
Manong 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…
On January 1, 2022, Heeseung Ramen Shop granted a franchise to a franchisee. The franchise agreement required the franchisee to pay a nonrefundable upfront fee in the amount of P550,000. The franchisee paid the upfront fee immediately on January 1, 2022. A continuing franchise fee of 10% based on annual sales is to be paid by the franchisee. It is the obligation of Heeseung Ramen Shop to construct a franchise stall, provide the franchisee a right to access the trade name for a period of five years and to deliver 10,000 kg. of ramen noodles to the franchisee. On October 1, 2022, Heeseung already finished construction of the stall. During 2022, 2,000 kilos of ramen noodles were delivered. The franchisee reported sales of P2,000,000 during 2022. The stand-alone prices are determined as follows: · Tradename – P400,000 · Ramen noodles – P150,000 · Stall – Not directly observable Based on the current market conditions, it was estimated that a customer in the market is willing…