1. How much is the Franchise Revenue to be recognized in 2021? 2. How much is the Revenue to be recognized in 2022?
Accurate Company charges its new franchisees an initial franchise fee of P2,500,000. Of this amount, P1,000,000 is payable in cash when the agreement is signed, and the remainder is to be paid in three equal annual installments which are evidenced by 12% interest-bearing note. In consideration therefore, Accurate will assist in locating business site, conduct a market study to estimate earnings potential, supervise construction of a building, and provide initial training to employees. On December 1, 2021, Accurate entered into a franchising agreement with a franchisee. The franchise outlet was opened on January 15, 2022. Accurate had incurred a cost of P800,000 related to the franchise and it has ascertained that the collection of the note is reasonably assured.
1. How much is the Franchise Revenue to be recognized in 2021?
2. How much is the Revenue to be recognized in 2022?
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How much is the Unearned Revenue at December 31, 2021?
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