True or false only under franchise in accounting 1. The current PFRSS do not address the accounting for revenuesfrom franchise contracts.2. If a promise to grant a license is distinct, the entity shall applythe specific principles to determine whether the licenseprovides the customer a right to access or a right to use theentity's intellectual property.3. If the intellectual property to which the customer has rightsdoes not change over the license period, the nature of theentity's promise to transfer the license is most likely a "right toaccess."4. If the nature of an entity's promise to transfer a license is a"right to use," revenue shall be recognized at a point in time.5. According to PFRS 15, revenue is measured at the fair value ofthe consideration received or receivable in the contract.

Answer: As per Bartleby guidelines, first question has been answered unless mentioned for specific…

Answered: The current PFRSS do not address the…

Business

Accounting

The current PFRSS do not address the aCcounting for revenues from franchise contracts.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 5P

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Why in franchise arrangements may it be improper torecognize the entire franchise fee as revenue at the dateof sale?
If the promise to grant a license is distinct and that the license provides the customer the “right to access” the entity’s intellectual property, how is revenue recognized from the initial fee in the contract? in full when the initial services to setup the contract are substantially performed deferred and amortized over the license period in full when the customer obtains and starts using the license in full upon the signing of the contract
Under PFRS 15, in which of the following instances will the revenue from contracts with customers be recognized at a point in time instead of over time? Group of answer choices When the entity’s performance creates or enhances an asset that the customer controls as the asset is created. When the customer simultaneously receives and consumes all of the benefits provided by the entity as the entity performs. When the entity has transferred physical possession and legal title to the asset to the customer When the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date.
Under PFRS 15, which of the following factors indicates that the revenue from contracts with customers is recognized from the moment the entity satisfies the performance obligation at a point in time? When the entity has transferred physical possession of the asset to the customer. When the customer simultaneously receives and consumes all the benefits provided by the entity as the entity performs. When the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. When the entity’s performance creates or enhances an asset that the customer controls as the asset is created.
Which of the following would most likely be considered as a separate performance obligation in a franchise agreement? a. initial services required of the franchisor that are in substance activities to setup the contract b. equipment that the franchisee is required to purchase or otherwise obtain from a third-party supplier c. grant of license to use the franchisor's trademark d. activities that the franchisor is required to undertake to support the intellectual property covered in the franchise
True or False According to PFRS 15, if an entity expects that a portion of giftcertificates sold will not be redeemed, the entity recognizes theexpected breakage amount as revenue in proportion to the pattern of rights exercised by customer
12 Under PFRS 15, when shall a franchisor recognizes revenue from its contingent franchise fee, also known as sales-based royalty revenue? Group of answer choices When the franchisor satisfies the performance obligation in relation to the initial franchise fee based on the accounting estimate using historical evidence When the sales of the franchisee occur When the franchisee signs the document evidencing the franchise agreement When the franchisor collected the nonrefundable upfront fee
Which of the following statements is true regarding contracts in ASC Topic 606 guidance for revenue recognition? Contracts need to be legally enforceable to be considered under ASC Topic 606. Contracts need to be in written form to be considered under ASC Topic 606. No consideration can be received before a contract exists. No price concessions can be made to an existing contract.
If an entity recognises the revenue associated with a contract with a customer over time (rather than at a point in time), would this approach be considered more conservative than an approach that defers profit recognition until the completion of the contract (that is, at a future point in time)?
[S1] Under the current PPRS, a franchisor recognizes the initial franchise fee as revenue in full at the commencement of the franchisee's business operation if the fee is for initial services to prepare the franchisee for business. [S2] A right to access is determined as a performance obligation when the franchisor's intellectual property is expected to change over the contract period. [A] Only S1 is true, [B] Only S2 is true. [C] Both are true. [D] Both are false. ABC obtained 2 fire insurances for his commercial building. During the year, the commercial building was burned. What legal principle prohibits ABC from relaxing and just watch the commercial building burn? [A] proximate cause [B] loss minimization [C] Contribution [D] Indemnity [S1] Where there is, double insurance, the insurers are to divide the loss ratably or in the ration each policy bears to the total insurance carried. [S2] When property is insured with different insurers against the same risk and total insurance…
Which of the following is not a condition in identifying the contract with the customer as per IFRS 15? a- Each party's rights with regard to the goods or services concerned can be identified b- It is certain that the entity will collect the consideration to which it is entitled c- The entity and the customer have approved the contract and are committed to perform their contractual obligations d- The payment terms can be identified
Which of the following is true? B. The agent is expected to carry out an agency although its execution would manifestly result in loss or damage to the principal. D. Agency is presumed to be for a compensation, unless there is proof to the contrary. A. The contract of agency is extinguished by the insanity of the agent but not of the principal. C. Two persons authorizing an agent to sell a property on their behalf are liable jointly to the agent.