On July 1, 2011, ABC, a franchisor, entered into a franchise agreement with EEE, a franchisee. The total franchise fees agreed upon is P2,100,000 of which P100,000 is payable upon signing and the balance payable in four annual installmen
Q: On December 31, 2020, Rice, Inc. authorized Graft to operate as a franchisee for an initial…
A: Unearned Franchise Fees:-It is an amount for which the company has performed services but does not…
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 December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial…
A: It is an accounting principle that states the conditions in which the revenue should be recognized…
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: On November 1, 2019, Gerakos Corporation sold software and a six-month technical support contract to…
A: Calculate the sales price of software:
Q: Dominos Pizza, franchisor, entered into a franchise agreement with Kabayan Co., franchisee, on July…
A: Unearned franchise fees is P100,000 When Dominos prepares its financial statements on July 31,…
Q: On January 1, 20X2, ABC signed an agreement to operate as a franchisee of Ace Company for an initial…
A: The assets are the items of the balance sheet which will generate future economic benefit for the…
Q: On January 1, 2020, an entity granted a franchise to a franchisee. The franchise agreement requires…
A: Revenue is recognized on fulfilling the performance obligation. The royalty is recognized on making…
Q: 1. On January 1, 2020, Sheffield signed an agreement to operate as a franchisee of Hsian Copy…
A:
Q: On July 1, 20x1, Wash Co. grants a franchisee the right to sell Wash Co.'s products in a specific…
A: It gives the right to the other person to carry the same selling activity or product.
Q: On December 1, 20x1, ABC Co. granted a 5-year franchise right to DEF Co. for an initial franchise…
A: Franchise agreement: It is a formal, binding contract between the franchisor and the franchisee. In…
Q: 1. On December 31, 2020, Rice, Inc. authorized Graft to operate as a franchisee for an initial…
A: “Since you have posted a many questions, we will solve first question for you. To get the remaining…
Q: . On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an…
A: Revenue: Revenue can be defined as the inflow of cash within the organization resulting from the…
Q: On Jan. 1, 2020, ABC Corporation entered into a franchise agreement with a P570,000 cash payment as…
A:
Q: On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial…
A: Revenue ( CANOROUS ) = 400000 + 10%*800000 = ₱480000
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: On December 1, 20X1, CANOROUS Co. granted a 5-year franchise to MELODIOUS, Inc. for an initial…
A: Revenue refers to the amount earned or accrued to the firm. If the firm is engaged in selling the…
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: On January 1, 2011, Michael August signed an agreement to operate as a franchisee of Ivan Steven for…
A: Franchise is a form of business entity in which the franchisee (User) obtains the right to perform…
Q: On March 31, 20x1, ABC Company provides a license to DEF. Under the license agreement, DEF pays a…
A: Recognition of Revenue: Revenues should be recognized on the income statement in the period as and…
Q: On January 1, 2011, Michael August signed an agreement to operate as a franchisee of Ivan Steven for…
A: On January 1, 2011, Franchise fees = P2000000 Down payment = P800000 Non interest note payable =…
Q: On January 1, 2020, Tine Company signed an agreement to operate as a franchisee of Sarawat Corp. for…
A: If the collection of franchisee income is not reasonably assured then the revenue is not recognized…
Q: On January 1, Nathan Company enters into a contract to provide custom-made equipment to Cushing…
A: Solution 1 The above question is related to revenue recognized concept. In above case the business…
Q: On July 1, 2011, ABC, a franchisor, entered into a franchise agreement with EEE, a franchisee. The…
A: The question is related to franchise accounting. ABC entered into a agreement with EEE. The total…
Q: JLC Inc., franchisor, entered into a franchise agreement with BEA, franchisee, on July 1, 2020. The…
A:
Q: Brave Corporation authorized Heart on January 1, 2010 to operate as a franchisee for an initial…
A: Franchise is a way of expanding the operations of the business worldwide. Any company can sell its…
Q: On January 3, 2008, PP Services, Inc. signed an agreement authorizing CC Company to operate as a…
A: Since we have received 50000 as initial franchise fees for 20 years then this 50000 is apportioned…
Q: At the beginning of current year, Seashore Company signed an agreement to operate as a franchisee…
A: Present value means the actual amount is adjusted with the interest rate so as to get the present…
Q: On January 1, SaLow Company enters into a contract to provide custom-made equipment to ByHi…
A: Revenues: Revenues are earnings from operations of a business. The operating activities are sale of…
Q: On July 1, 2021, HAZELNUT Company acquired machinery worth ₱2,500,000 from PINE NUTS Corporation.…
A: SOLUTION- CURRENT LIABILITIES ARE AN ENTERPRISE'S OBLIGATIONS OR DEBT THAT ARE DUE WITH IN ONE YEAR…
Q: On July 1, 2021, Ghana Company signed an agreement to operate as a franchisee of Fast Foods, Inc.…
A: Given data, Initial franchise fee =P6,000,000 Down payment =P2,000,000 Balance =P6,000,000 -…
Q: On January 1, 2019, Tulip signed an agreement to operate as a franchise of Flower Service Inc. for…
A: In the context of the given question, we are required to compute the carrying amount of intangible…
Q: In relation to the nonrefundable upfront fee, the franchise agreement required the entity to render…
A: Revenue is recognised when the performance obligation is met. The royalty is realised when sales are…
Q: Diva Who In
A: The calculation is as follows:- Workings: Calculation of Present value of Note receivable:-…
Q: On July 1, 2014, Mark Company acquired machinery worth P 2,500,000 from Julian Corporation. Terms of…
A: Note payable=Equipment value-Down payment=P 2,500,000-P 500,000=P 2,000,000
Q: On December 31, 2018, SG signed an agreement authorizing Asher Company to operate as a franchisee…
A: The franchisor needs to recognize the franchisee's income at the time of providing service to the…
Q: On May 1, 2010, Jollibee Inc., a franchisor, entered into a franchise agreement with Session…
A: Deferred revenue can be defined as the prepayment that is made by the customers for goods or…
Q: On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial…
A: Franchise is a marketing concept adopted by organizations as a strategy for business expansion. It…
Q: On July 1, 2019, HOSPITAL CORP. signed an agreement to operate as a franchise of PLAYLIST CO. for an…
A: Franchise, in case of deferred payment, shall be recognised at the cash price after removing the…
Q: On March 31, 20x1, ABC Company provides a license to Mr. X. Under the license agreement, Mr. X pays…
A: Revenues in connection with the term licenses are recognized proportionately over the license term.
Q: Dominos Pizza, franchisor, entered into a franchise agreement with Kabayan Co., franchisee, on July…
A: Solution: Down payment on signing = P500,000
Q: Denim, Inc. entered into a contract to sell equipment to Levi LLC. on October 1, 2021. Along with…
A: The above question is based on accounting standard 115, i.e. Revenue from contracts with customer…
Q: A Franchisor entered into a franchise agreement with B, franchisee, on March 31, 2021. The total…
A: A franchise is an agreement in which the owner of the asset (an asset can be the intangible asset or…
Q: On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial…
A: On December 01, 20x1 CANOROUS Co. granted a franchise right to MELODIOUS Inc. Initial fees = P400000…
Q: At the beginning of the current year, Hart Company signed an agreement to operate aa a franchise for…
A: Equal annual payments P10,00,000 Present value of an ordinary annuity of 1 at 14% for 4 periods…
Q: On January 1, 2030, ABC granted a 3 year franchise contract with XYZ. The terms of the contract are…
A: Franchise Agreement In simple word the word franchise agreement which is described as legal…
Q: On Jan. 1, 20x1, Hurt Co. entered into a franchise agreement with Hero Co. The franchise contract…
A: Franchise business is done mainly to increase its market share or geographical reach at low costs. A…
Q: On January 1, 20x20, an entity granted a franchise to a franchisee. The franchise agreement…
A: The question is based on the concept of Financial Accounting.
Q: rporation is a franchisor. On Dec. 31, 2020, it entered into a franchise agreement that requires the…
A: Notes are to be settled by the equal annual payments that carry the payment for interest and…
On July 1, 2011, ABC, a franchisor, entered into a franchise agreement with EEE, a franchisee. The total franchise fees agreed upon is P2,100,000 of which P100,000 is payable upon signing and the balance payable in four annual installments. It was agreed that the down payment is non-refundable, notwithstanding lack of substantial performance of services by franchisor. The deferred revenue from franchise fee to be reported in the July 31, 2011 financial statements of AAA would be:
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January 1, 2019. In addition, Spath agrees to sell inventory to the customer at reduced prices over a 5-year period. Spaths incremental borrowing rate is 12%. The customer agrees to purchase an equal amount of inventory each year over the 5-year period so that a straight-line method of revenue recognition is appropriate. Required: Prepare the journal entries on Spaths books for 2019 and 2020. (Round answers to 2 decimal places.)On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020.
- On December 31, 2016, Crispy Cream, Inc. authorized J. Guerrero to operate as a franchisee for an initial franchisee fee of P1,500,000. Of this amount, P600,000 was received upon signing the agreement and the balance, represented by a note, is due in three annual payments, appropriately discounted is P720,000. According to the agreement, the non-refundable down payment represents a fair measure of the services already performed by Crispy Cream however, substantial future services are required of Crispy Cream. Collectability of the note isreasonably certain. On December 31, 2016, what entry should Crispy Cream record for the receipt of the initial franchise fee? a.Cash 600,000Notes Receivable 900,000Unearned interest income 180,000Franchise Revenue 600,000Unearned Franchise fees 720,000 b. Cash 600,000Notes Receivable…On January 1, 2011, Michael August signed an agreement to operate as a franchisee of Ivan Steven for an initial franchise fee of P2,000,000. The amount of P800,000 was paid when the agreement was signed, and thebalance is covered by a non-interest bearing note payable in five annual payments of P240,000 each, beginning January 1, 2012. The agreement provides that the downpayment is not refundable and that no future services are required of the franchisor. The franchisee’s credit rating indicates that he can borrow money at 11% for a loan of this type. The present value of an ordinary annuity of 1 at 11% for five periods is 3.69590.Requirements: Determine the amount that Ivan Steven should record as revenue from franchise fee on January 1,2011. On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc. for an initial franchise fee of ₱400,000 and a 10% sales-based royalty. The initial franchise fee is non-refundable and due upon signing of the contract. At…On December 31, 2011, Coffee Blends, Inc. signed an agreement authorizing Ms. De Jesus to operate as a franchisee for an initial franchise fee of P500,000. Of this amount, P200,000 was received upon signing of the agreement and the balance is due in three annual payments of P100,000 each beginning December 31, 2012. The agreement provides that the down payment (representing a fair measure of the substantial initial services rendered by Coffee Blends) is not refundable although some future services (insignificant) are yet to be performed. Ms. De Jesus’ credit rating is such that the collection of the note is reasonably assured. The present value at December 31, 2011 of the three payments discounted at 14% is P232,200. What is the amount of unearned franchise fee to be recorded by Coffee Blends, Inc. on December 31, 2011? a. P232,200b. P0c. P300,000d. P422,200
- Dominos Pizza, franchisor, entered into a franchise agreement with Kabayan Co., franchisee, on July 1, 2021. The total franchise fees agreed upon is P2,500,000, of which P500,000 is payable upon signing and the balance payable in four equal annual installments. It was agreed that the down payment is not refundable, notwithstanding lack of satisfaction of any performance obligation by the franchisor. When Dominos prepares its financial statements on July 31, 2021, the unearned franchise fees to be reported is how much?On January 1, 2011, Michael August signed an agreement to operate as a franchisee of Ivan Steven for an initial franchise fee of P2,000,000. The amount of P800,000 was paid when the agreement was signed, and the balance is covered by a non-interest-bearing note payable in five annual payments of P240,000 each, beginning January 1, 2012. The agreement provides that the down payment is not refundable and that no future services are required of the franchisor. The franchisee’s credit rating indicates that he can borrow money at 11% for a loan of this type. The present value of an ordinary annuity of 1 at 11% for five periods is 3.69590. Requirements: Determine the amount that Ivan Steven should record as revenue from franchise fee on January 1,2011.On January 1, 2011, Michael August signed an agreement to operate as a franchisee of Ivan Steven for an initial franchise fee of P2,000,000. The amount of P800,000 was paid when the agreement was signed, and the balance is covered by a non-interest bearing note payable in five annual payments of P240,000 each, beginning January 1, 2012. The agreement provides that the down payment is not refundable and that no future services are required of the franchisor. The franchisee’s credit rating indicates that he can borrow money at 11% for a loan of this type. The present value of an ordinary annuity of 1 at 11% for five periods is 3.69590.Requirements: Determine the amount that Ivan Steven should record as revenue from franchise fee on January 1, 2011.
- Brave Corporation authorized Heart on January 1, 2010 to operate as a franchisee for an initial franchise fee of P2,500,000. Of this amount, P1,500,000 was received upon signing of the contract and the balance is due in two equal annual payments beginning January 1, 2011. The contract provides that the nonrefundable downpayment represents fair measure of the services already performed, however, substantial performance is still required of Brave. Collectibility of the note is reasonably certain. If the present value of the two annual payments is P895,000, what amount of unearned franchise fees from Heart should Brave report on December 31, 2010?On December 31, 2018, SG signed an agreement authorizing Asher Company to operate as a franchisee for an initial franchise fee of P750,000. Of this amount, P250,000 nonrefundable down payment was paid upon signing of the agreement and the balance is payable in four equal annual payment beginning December 31, 2018. The nonrefundable down payment represents a fair measure of the services already performed by SG however, substantial future services are required of SG. Asher’s credit rating is such that collection of the note is reasonably certain and that the money can be borrowed at 12%. On December 31, 2018, earned franchise fees should be reported as: (Round off present value factor to 2 decimal places.)On January 1, 2022, Black Mamba Company signed an agreement to operate as a franchise of Doug company for an initial franchise fee of P30,000,000. Of this amount, P10,000,000 was paid when the agreement was signed and the balance is payable in equal annual payment of P5,000,000 beginning December 31, 2022. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. Black Mamba’s credit rating indicates that it can borrow money at 12% for loan of this type. How much is the cost of franchise? A. 30,000,000 B. 25,186,000 C. 21,541,500 D. 19,065,000