The franchisor charges an initial franchise fee of P110,000 broken down as follows:Right to trade name, market, know-how P 50,000Training servicesEquipment (Cost of P10,800)Total initial franchise fee20,00040,000P110,000Upon signing of the agreement, a payment of P70,000 is due. Thereafter, two annualpayments of P30,000 are required. The credit rating of the franchisee is such that itwould have to pay interest of 8% to borrow money. The franchise agreement issigned on August 1, 2019, and the franchise commences operation on November 1,2019. Assuming that no future services are required by the franchisor once thefranchise begins operations, the entry on August 1, 2019 would include:

A franchise is a firm in which the owner licences his or her operations, as well as its products,…

tight to trade name, market, know-how P 50,000 raining services 20,000 quipment (Cost of P10,800) 40,000 otal initial franchise fee P110,000 pon signing of the agreement, a payment of P70, ymonts of P30.000 are roquirod The crodit rotin

tight to trade name, market, know-how P 50,000 raining services 20,000 quipment (Cost of P10,800) 40,000 otal initial franchise fee P110,000 pon signing of the agreement, a payment of P70, ymonts of P30.000 are roquirod The crodit rotin

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

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 2RE: Yankee Corp. agrees to provide Albany Company 24 months of coaching services. The contract sets the...

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Markson and Sons leases a copy machine with terms that include a fixed fee each month of $500 plus a charge for each copy made. The company uses the high-low method to analyze costs. If Markson paid $360 for 5,000 copies and $280 for 3,000 copies, how much would Markson pay if it made 7,500 copies?
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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.
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Pina Universe charges an initial franchise fee of $ 234,000. Upon the signing of the agreement, a payment of $ 26,000 is due. Thereafter, 5 annual payments of $ 41,600 are required. The credit rating of the franchisee is such that it would have to pay interest at 9% to borrow money. The franchise agreement is signed on August 1, 2020, and the franchise commences operation on October 1, 2020. Prepare the journal entries in 2020 for the franchisor under the following assumptions. a. No future services are required by the franchisee once the franchise starts operations. b. The franchisor has substantial services to perform, once the franchise begins operations, to maintain the value of the franchise. c. The total franchise fee includes training services (with a value of $ 6,900) for the period leading up to the franchise opening and for 2 months following opening
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