Problem 3: MNO Corp. completed a three-month franchise contract.The terms of the contract include a P50,000 down payment and aP100,000 note receivable upon the start of the operations. MNOincurred direct costs of P40,000 and administrative costs of P20,000.The prevailing market rate of interest for similar notes is 12% butMNO deems the interest to be immaterial.BAGUIO CITYRequired:9. Gross profit from the franchise contract

Franchise Contract : Franchise is a kind of license that gives the right to use the name of the…

se cont terms of the contract include a P50,000 down payment and O,000 note receivable upon the start of the operations. MNC rred direct costs of P40,000 and administrative costs of P20, prevailing market rate of interest for similar notes is 12% bu O deems the interest to be immaterial. Required: 1911 BAGUIO CITY

se cont terms of the contract include a P50,000 down payment and O,000 note receivable upon the start of the operations. MNC rred direct costs of P40,000 and administrative costs of P20, prevailing market rate of interest for similar notes is 12% bu O deems the interest to be immaterial. Required: 1911 BAGUIO CITY

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

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 9RE: Dexter Construction Corporation is building a student condominium complex; it started construction...

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Dexter Construction Corporation is building a student condominium complex; it started construction on January 1, Year 1. Dexter borrowed 2.5 million on January 1 specifically for the project by issuing a 10%, 5-vear, 2.5 million note, which is payable on December 31 of Year 3. Dexter also had a 12%, 5-year, 3 million note payable and a 10%, 10-year, 1.8 million note payable outstanding all year. Calculate the weighted average interest rate on the non-construction-specific debt for Year 1. RE10-9 Refer to RE10-8. In Year 1, Dexter incurred costs as follows: Calculate Dexters weighted average accumulated expenditures.
On January 1, 20x1, Marc Company enters into a contract with a customer to transfer a license. The initial franchise fee is P200,000, payable as follows: 20% cash down payment upon signing of the contract, and the balance is payable in four (4) equal annual installments starting December 31, 20X1. The appropriate discount rate is 10%. The contract also requires Marc Company to transfer equipment to the customer. The equipment has a cost of P30,000 and a stand-alone selling price of P50,000. The license has a stand-alone selling price of P38,000. Marc Company regularly sells the license and the equipment separately. The equipment is transferred to the customer on January 15, 20x1, while the license is transferred to the customer on February 1, 20x1. REQUIRED: Compute for the following Total transaction price Transaction price allocated to the license Transaction price allocated to equipment Franchise fee revenue
1. Burger King granted a franchise to Shakers where Shakers will have to pay franchise fee of P5,000,000 payable in four equal annual installments with the first payment starting on the date of signing the contract. The franchisee was to pay 5% of gross sales of the preceding month. Should the operations of the outlet prove to be unprofitable, the franchise may be cancelled with whatever obligation owing Burger King, in connection with the P5,000,000 franchise fee waived. If the first year of operations generated a gross sales of P1,340,000, what amount of franchise fee did Burger King earn? 2. During 2009, Mason Construction, Inc. started work on a P 5,200,000 fixed-price construction contract to be completed in two years. The accounting records disclosed the following data for the year ended December 31, 2009: Cost incurred P 2,650,000Estimated cost to complete 2,720,000Progress billings 2,500,000Collections 2,000,000What amount of net income or loss should have been recognized in…
5.) Chick 2 Go, Inc. charges an initial franchise fee of P115,000, with P25,000 paid when the agreement was signed and the balance in five annual payments. The prevailing interest rate upon signing the contract was 10%. The Franchisee has the option to purchase P15,000 of equipment for P12,000. Chick 2 Go has substantially provided all initial services required and collectability of the payment is reasonably assured. Required:a.) The amount of revenue recognized from the franchise fee was:b.) How much is the balance of receivable after 2 installment payment has been made?
4.FOR NUMBERS 4 - 6:Brilliant Company sold a franchise to sell its products for P5,000,000 on January 1, 2021. The initial fee is payable P500,000 upon signing of the contract and the balance in 5 equal installments every December 31, evidenced by a 12% promissory note. The agreement provides that the franchisor will assist in the location of site, supervision of the building construction, project study or market survey, assistance in the acquisition of facilities, training and management of personnel, quality control, advertising and promotion. It was also agreed that the franchisee will pay a royalty fee equal to 5% of its average sales every calendar year. The franchise outlet was opened on May 1, 2021 and the average monthly sales of the franchisee is P100,000. The franchisor has incurred P1,500,000 related to the services required by the contract.1. How much is the Initial Franchise Fee Revenue to be recognized in 2021?
Pacific Crossburgers Inc. charges an initial fee of P70,000. Upon the signing of the agreement (which covers 3 years), a payment of P28,000 is due. Thereafter, three (3) annual payments of P14,000 are required. The credit rating of the franchisee is such that it would have to pay interest at 10% to borrow money. The franchise agreement signed on May 1, 20x5, and the franchise commences operation on July 1, 20x5. Assuming that the total franchise fee includes training services (with a value of P2,400) for the period leading up to the franchise opening and for two (2) months following opening.
Problem 4: On April 1, 2020, DEF Corporation entered into a franchise agreement. This will allow DEF to collect P200,000 cash as down payment and a 5-year, 8%, P1,000,000 note. The effective rate equals nominal rate for this note. The franchise allows the franchisee to use DEF Corporation's intellectual property and any updates to those over a period of 10 years. Required: 10. Contract liability as of Dec. 31, 2020 11. Total carrying value of the receivables from the customer as of Dec. 31, 2020
9. On January 1, 20X2, ABC Company signed an agreement to operate as franchisee of XYZ Company for an initial franchise fee of P 30,000,000. Of this amount, P 10,000,000 was paid when the agreement was signed and the balance is payable in equal annual payment of P 5,000,000 beginning December 31, 20X2. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. ABC’s credit rating indicates that it can borrow money at 12% for a loan of this type. Determine the cost of the franchise. (Use 4-decimal PVF)
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…
1. ABC Island, Inc. charges an initial franchise fee of ₱75,000 for the right to operate as a franchisee of ABC Island. Of this amount, ₱25,000 is collected immediately. The remainder is collected in four equal annual installments of ₱12,500 each. These installments have a present value of ₱41,402. As part of the total franchise fee, Frozen Delight also provides training (with a fair value of ₱2,000) to help franchisees get the store ready to open. The franchise agreement is signed on April 1, 2020, training is completed, and the store opens on July 1, 2020. The amount of total revenue from training and franchise on July 1, 2020 is? 64,402 66,402 75,000 0
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?
4.) On December 31, 2023, Peter Company signed an agreement to operate as franchise of Wendy’s for a franchise fee of P80,000. Of this amount, P30,000 was paid upon signing of the agreement and the balance is payable in five annual payments of P10,000 each beginning December 31, 2023. The present value of the five payments, at an appropriate rate of interest, is P36,000 on December 31, 2023. The agreement provides that the down payment is not refundable, and no future services are required of the franchisor. The collection of the note receivable is reasonably certain. Wendy’s Company should report unearned revenue from franchise fee in its December 31, 2023, balance sheet at: