Watts Inc. charges an initial franchise fee of P690,000, with P150,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10%, is P409,400. The franchisee has the option to purchase P90,000 of equipment for P70,000. Watts has substantially provided all initial services required and collectability of the payments is reasonably assured. The amount of revenue from franchise fees is?
Watts Inc. charges an initial franchise fee of P690,000, with P150,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10%, is P409,400. The franchisee has the option to purchase P90,000 of equipment for P70,000. Watts has substantially provided all initial services required and collectability of the payments is reasonably assured. The amount of revenue from franchise fees is?
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
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Watts Inc. charges an initial franchise fee of P690,000, with P150,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10%, is P409,400. The franchisee has the option to purchase P90,000 of equipment for P70,000. Watts has substantially provided all initial services required and collectability of the payments is reasonably assured.
The amount of revenue from franchise fees is?
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