Problem ?On January 1, 2012 Outlandish Company entered into a franchise agreement with JollibeeCompany to sell Jollibee products for an indefinite period The agreement provides for an initialfee of P20, 000, 000,four equal annunl payments every December 31. The entity signed 10% interest-bearing not forthe balance The collection of the note is teasotubly nssured. The ogreemient furthet provides thatthe franchisor will assist in the site location, make a survey of potential market and providetraining of management and employees In January 2012, Jollibee Company has alreadyperformed ull inilial services required under the ngreementP5, 000, 000 down upon signing of the contract and the balance inRequiredPrepare all entrics for 2012 on the books of the franchisee and franchisor

Name: Problem ?On January 1, 2012 Outlandish Company entered into a franchi
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Description: Problem ?On January 1, 2012 Outlandish Company entered into a franchise agreement with JollibeeCompany to sell Jollibee products for an indefinite period The agreement provides for an initialfee of P20, 000, 000,four equal annunl payments every Dece

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Accounting

Problem 7 On January 1, 2012 Outlandish Company entered into a franchise agreement with Jollibee Company to sell Jollhbee products for an indefinite period. The agreement provides for an initial fee of P20, 000, 000, four equal annual payments every December 31. The entity signed 10% interest-bearing not for the balance The collection of the note is teasonably assured. The ogreemient further provides that the franchisor will assist in the site location, make a survey of potential market and provide training of management and employees. In January 2012, Jollibee Company has already performed all initial services required under the agteement P5, 000, 000 down upon signing of the contract and the balance in Required Prepare all entries for 2012 on the books of the franchisee and franchisor

Problem 7 On January 1, 2012 Outlandish Company entered into a franchise agreement with Jollibee Company to sell Jollhbee products for an indefinite period. The agreement provides for an initial fee of P20, 000, 000, four equal annual payments every December 31. The entity signed 10% interest-bearing not for the balance The collection of the note is teasonably assured. The ogreemient further provides that the franchisor will assist in the site location, make a survey of potential market and provide training of management and employees. In January 2012, Jollibee Company has already performed all initial services required under the agteement P5, 000, 000 down upon signing of the contract and the balance in Required Prepare all entries for 2012 on the books of the franchisee and franchisor

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 11E

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On January 1, Kilgore Inc. accepts a 20,000 non-interest-bearing, 5-year note from Dieland Company for equipment. Neither the fair value of the note nor the equipment is determinable. Kilgore had originally purchased the equipment for 18,000, and the equipment has a book value of 14,000 on January 1. Kilgore knows Dielands incremental borrowing rate of 9%. Prepare the journal entry for Kilgore to record the sale of the equipment on January 1.
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Comprehensive Notes Receivable On January 1, 2019, Seaver Company sold land with a book value of 23,000 to Bench Company. Bench paid 15,000 down and signed a 15,000 non-interest-bearing note, payable in two 7,500 annual installments on December 31, 2019, and 2020. Neither the fair value of the land nor of the note is determinable. Benchs incremental borrowing rate is 12%. Later in the year, on July 1, 2019, Seaver sold a building to Hane Company, accepting a 2-year, 100,000 non-interest-bearing note due July 1, 2021. The fair value of the building was 82,644.00 on the date of the sale. The building had been purchased at a cost of 90,000 on January 1, 2014, and had a book value of 67,500 on December 31, 2018. It was being depreciated on a straight-line basis (no residual value) over a 20-year life. Required: 1. Prepare all the journal entries on Seavers books for January 1, 2019, through December 31, 2020, in regard to the Bench note. 2. Prepare all the journal entries on Seavers books for July 1, 2019, through July 1, 2021, in regard to the Hane note. 3. Prepare the notes receivable portion of Seavers balance sheet on December 31, 2019 and 2020.
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4 On January 1, 2019, Daisy company signed an agreement to operate as a franchisee for an initial franchise fee of 9,600,000 for a period of 10 years. Of this amount 3,600,000 was paid when the agreement was signed and the balance payable in five annual installments of 1,200,000 at every year-end. The franchisee signed a non-interest bearing note for the balance. The market rate of interest for this note is 10%. The PV of 1 at 10% for 5 periods is 0.62, and the PV of an ordinary annuity of 1 at 10% for 5 periods is 3.79. In return for the initial franchise fee, the franchisor will help in locating the site, negotiate the lease or purchase the site, supervise the construction activity and provide training to employees. The initial services required of the franchisor are substantially performed. What is the amount of amortization of franchise in 2019?
ABC Corporation is a franchisor. On Dec. 31, 2020, it entered into a franchise agreement that requires the franchisee to issue a non-interest bearing P2,000,000 note. The note will be settled in 4 equal annual collections starting Dec. 31, 2020. ABC charges 8% on notes to customers with similar credit background as the franchisee. The franchisee complied with the payment terms. The franchise including continuing services starts on Jan. 1, 2021 and ends on Dec. 31, 2026. How much total revenue should ABC Corporation report for the year 2021?
On January 1, 2019, Daisy company signed an agreement to operate as a franchisee for an initial franchise fee of9,600,000 for a period of 10 years. Of this amount 3,600,000 was paid when the agreement was signed and thebalance payable in five annual installments of 1,200,000 at every year-end. The franchisee signed a non-interestbearing note for the balance. The market rate of interest for this note is 10%. The PV of 1 at 10% for 5 periods is 0.62,and the PV of an ordinary annuity of 1 at 10% for 5 periods is 3.79. In return for the initial franchise fee, the franchisorwill help in locating the site, negotiate the lease or purchase the site, supervise the construction activity and providetraining to employees. The initial services required of the franchisor are substantially performed. What is the amountof amortization of franchise in 2019?
On January 1, year 1, Suzette Company signed a franchise agreement for a period of20 years for an initial fee of 6,000,000.On the same date, the entity paid 2,000,000 which is not refundable and agreed topay the balance in four equal annual payments of 1,000,000 at each year end.No future services are required are required of the franchisor. The entity can borrowat 14% for a loan of this type.Present value of 1 at 14% for 4 periods 0.59Future amount of 1 at 14% for 4 periods 1.69Present value of an ordinary annuity of 1 at 14% for 4 periods 2.91 The agreement further provides that the franchisee shall pay a periodic fee of 5% based onthe annual gross sales. During the current year, Suzette Company realized gross sales of25,000,000 Prepare the journal entries for two years in connection with the franchise on the books of thefranchisee. Required: Determine the initial measurement of the franchise…
On January 1, 2020, Tine Company signed an agreement to operate as a franchisee of Sarawat Corp. for an initial franchise fee of P937,500 for 7 years. Of this amount, P175,000 was paid when the agreement was signed and the balance payable in four annual payments beginning on December 31, 2020. Tine signed a non-interest bearing note for the balance. Tine's rating indicates that borrow money at 16% for the loan of this type. Assume that substantial services amounting to P283,500 had already been rendered by Sarawat and that additional indirect franchise cost of P25,500 was also incurred. (Round PV factor to 2 decimal places). If the collection of the note is not reasonably assured, the net income for the year ended December 31, 2020 is: