Paris paid Cherry $333,333 on 12/31/2020 for the exclusive right to market a particular product using the Cherry Co name and logo in promotional material. The franchise follows the rules of Going Concern What is the net impact on net income of any entry(ies) necessary related to the franchise at 12/31/2021?
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1. Paris paid Cherry $333,333 on 12/31/2020 for the exclusive right to market a particular product using the Cherry Co name and logo in promotional material. The franchise follows the rules of Going Concern
What is the net impact on net income of any entry(ies) necessary related to the franchise at 12/31/2021?
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- On January 1, 2020, an entity granted a franchise to a franchisee. The franchise agreement requires the franchisee to pay a non refundable upfront fee in the amount of P400,000 and on-going payment of royalties equivalent to 5% of the sales of the franchisee. The franchisee paid the non refundable upfront fee on January 1, 2020. In relation to the non refundable upfront fee, the franchise agreement requires the entity to render the following performance obligations: a) To construct the franchisee's stall with stand-alone selling price of P200,000 b) To deliver 10,000 units of raw materials to the franchisee with stand-alone selling price of P250,000 c) To allow the franchisee to use the entity tradename for a period of 10 years starting January 1, 2020 with stand-alone selling price of P50,000. On June 30, 2020, the entity completed the construction of the franchisee's stall. As of December 31, 2020, the entity was able to deliver 3,000 units of raw materials to the franchisee. For the…On January 1, 2022, ABC Company granted a franchise to a franchisee. The franchise agreement required the franchisee to pay a nonrefundable upfront fee in the amount of P600,000 under the following payment scheme: January 1, 2022 P100,000 January 1, 2023 300,000 January 1, 2024 150,000 January 1, 2025 25,000 January 1, 2026 25,000 The franchise agreement also provides that interest of 2% per annum will be paid every January 1 based on the unpaid balance. The effective interest rate is 2.5%. Under the franchise agreement, the franchisor is required to do the following: Construct the franchisee’s stall with a stand-alone price of P400,000. Deliver equipment and supplies to the franchisee with a stand-alone price of P150,000. Allow the franchisee to use the tradename for a period of five years starting in 2022 with a stand-alone price of P250,000. ABC Company considers each of the following items above as a distinct performance obligation that is…3. Assume on December 31, 2018, Tran receives $1,000,000 for all sales-based royalties earned from Lyon in2018. What journal entry would Tran record on December 31, 2018, to recognize any revenue that should berecognized in 2018 with respect to the Lyon license that it has not already recognized?
- 2. Paris paid Cherry $333,333 on 12/31/2020 for the exclusive right to market a particular product using the Cherry Co name and logo in promotional material. The franchise follows the rules of Going Concern. Paris also spent $600,000 on 12/31/2020 in developing a new manufacturing process. Its application for a patent is submitted. Paris believes it will be successful What is the Net Impact on Net Income for the year ended 2021?On March 01, 2021, WX entered into a franchise contract with YZ. The franchise agreement required the franchisee, YZ, to pay a nonrefundable upfront fee in the amount of P1,440,000 and on-going payment of royalties equivalent to 5% of the sales of the franchisee. YZ paid the non-refundable upfront fee on March 01, 2021. In relation to the nonrefundable upfront fee, the franchise agreement required WX to render the following performance obligations: To construct the franchisee's stall with stand-alone selling price of P300,000. To supply cooking equipment and cash registers. Price of competitors for the similar items (cooking equipment and cash registers) is valued at P240,000 while the forecast of the expected cost of AshLloyd for the performance obligation is P200,000 plus an appropriate margin above cost of 25%. To deliver 10,000 units of raw materials to YZ with stand-alone selling price of P460,000. To allow YZ to use the entity's tradename for a period of 10 years starting on the…A Franchisor entered into a franchise agreement with B, franchisee, on March 31, 2021. The total franchise fee is P500,000, of which P100,000 is payable upon signing and the balance in four equal annual installments. The down payment is refundable in the event the franchisor fails to render services and none thus far had been rendered. When B's prepares its financial statements on March 31, 2021, the franchise fee revenue to be reported is?
- On March 01, 2021, WX entered into a franchise contract with YZ. The franchise agreement required the franchisee, YZ, to pay a nonrefundable upfront fee in the amount of P1,440,000 and on-going payment of royalties equivalent to 5% of the sales of the franchisee. YZ paid the non-refundable upfront fee on March 01, 2021. In relation to the nonrefundable upfront fee, the franchise agreement required WX to render the following performance obligations: To construct the franchisee's stall with stand-alone selling price of P300,000. To supply cooking equipment and cash registers. Price of competitors for the similar items (cooking equipment and cash registers) is valued at P240,000 while the forecast of the expected cost of AshLloyd for the performance obligation is P200,000 plus an appropriate margin above cost of 25%. To deliver 10,000 units of raw materials to YZ with stand-alone selling price of P460,000. To allow YZ to use the entity's tradename for a period of 10 years starting…1. On January 1, 2020, Sheffield signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $100,000. Of this amount, $20,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $20,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020, of the 4 annual payments discounted at 12% (the implicit rate for a loan of this type) is $60,750. The agreement also provides that 6% of the revenue from the franchise must be paid to the franchisor annually. Sheffield’s revenue from the franchise for 2020 was $840,000. Sheffield estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.) 2. Sheffield incurred $60,000 of experimental and development…65 On January 1, 20x20, an entity granted a franchise to a franchisee. The franchise agreement required the franchisee to pay a nonrefundable upfront fee in the amount of P400,000 and on-going payment of royalties equivalent to 5% of the sales of the franchisee. The franchisee paid the nonrefundable upfront fee on January 1, 20x20. In relation to the nonrefundable upfront fee, the franchise agreement required the entity to render the following performance obligations: To construct the franchisee’s stall with stand-alone selling price of P200,000. To deliver 10,000 units of raw materials to the franchisee with stand-alone selling price of P250,000. To allow the franchisee to use the entity tradename for a period of 10 years starting January 1, 20x20 with stand-alone selling price of P50,000. On June 30, 20x20, the entity completed the construction of the franchisee’s stall. On December 31, 20x20, the entity was able to deliver 3,000 units of raw materials to the…
- On January 1, 2018, an entity granted a franchise to a franchisee. The franchise agreement required the franchisee to pay a nonrefundable upfront fee in the amount of P800,000 and on-going payment of royalties equivalent to 5% of the sales of the franchisee. The franchisee paid the nonrefundable upfront fee on January 1, 2018. In relation to the nonrefundable upfront fee, the franchise agreement required the entity to render the following performance obligations: · To construct the franchisee’s stall with stand-alone selling price of P400,000. · To deliver 20,000 units of raw materials to the franchisee with stand-alone selling price of P500,000. · To allow the franchisee to use the entity tradename for a period of 10 years starting January 1, 2018 with stand-alone selling price of P100,000. On June 30, 2018, the entity completed the construction of the franchisee’s stall. On December 31, 2018, the entity was able to deliver 6,000 units of raw…ABC Corp. is engaged in the manufacture and sale of facemasks. To increase sales, the marketing arm of the Company entered into consignment agreements with third parties. Inday. a consignee received the facemasks on March 1, 2021. If unsold, VAT shall accrue on: O April 29, 2021 O May 1, 2021 O April 30, 2021 O No VAT shall accrue6. Which of the following is not considered separate performance obligation in relation to the franchise agreement? a. grant of franchise right b. delivery of kitchen equipment c. franchisor's promise to undertake activities to support the franchise d. all of these are considered as a single performance obligation 7. On Jan 1, how will the initial franchise fee be recorded? a. credit contract liability of Php750,000 b. credit revenue of Php750,000 c. credit contract liability of Php600,000 d. credit revenue of Php150,000 8. How would the entity recognize revenue from the delivery of equipment? a. in full on Jan 1, 2021 b. in full on Mar 1, 2021 c. in full on May 1, 2021 d. deferred and amortize over the franchise term starting May 1, 2021 9. Which of the following is correct in determining the satisfaction of performance obligations? a. in the grant of franchise right, specific principles will be used b. in the…
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