What is the carrying value of the franchise at December 31, 2022? How much is the amortization expense for the year 2021?
What is the carrying value of the franchise at December 31, 2022? How much is the amortization expense for the year 2021?
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 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....
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On April 1,2021, Beauty Company purchased a franchise for P3,000,000. In addition , the franchise contract stipulates that Beauty shall pay to the franchisor, 5% of its sales exceeding P6,000,000, payable at the end of the month following the end of every quarter. For the nine months ended Dec. 31, 2021, Beauty's s sales amounts to P8,500,000. The estimated useful life of the franchise is 10 years. It is the company’s policy to amortize to the nearest month.
What is the carrying value of the franchise at December 31, 2022?
How much is the amortization expense for the year 2021?
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