On January 1, 2020, ABC Co., a well-known basketball, licenses the use of its name and logo to a customer. The customer, an apparel designer, has the right to use. ABCs’ name and logo on items including t-shirts, caps, mugs and towels for five years. In exchange for providing the license, ABC will receive a fixed consideration of P1,000,000 and a royalty of 10% of the sales price of any items using the team name or logo. The customer expects that ABC will continue to play games and provide competitive team. The license is transferred to the customer at contract inception. The customer reports sales of P2,000,000 for the year. How much revenue will ABC recognize for the contract in 2020?
On January 1, 2020, ABC Co., a well-known basketball, licenses the use of its name and logo to a customer. The customer, an apparel designer, has the right to use. ABCs’ name and logo on items including t-shirts, caps, mugs and towels for five years. In exchange for providing the license, ABC will receive a fixed consideration of P1,000,000 and a royalty of 10% of the sales price of any items using the team name or logo. The customer expects that ABC will continue to play games and provide competitive team. The license is transferred to the customer at contract inception. The customer reports sales of P2,000,000 for the year. How much revenue will ABC recognize for the contract in 2020?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 6MC
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On January 1, 2020, ABC Co., a well-known basketball, licenses the use of its name and logo to a customer. The customer, an apparel designer, has the right to use. ABCs’ name and logo on items including t-shirts, caps, mugs and towels for five years.
In exchange for providing the license, ABC will receive a fixed consideration of P1,000,000 and a royalty of 10% of the sales price of any items using the team name or logo.
The customer expects that ABC will continue to play games and provide competitive team. The license is transferred to the customer at contract inception. The customer reports sales of P2,000,000 for the year.
How much revenue will ABC recognize for the contract in 2020?
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