JANE creates a franchise for the sale of a particular product. JANE incurs P600,000 initial direct costs for each franchise granted. At December 31, 20x6, JANE granted the following people franchises that have open accounts with JANE. ANNA BETY CHERRY DANA Cash paid (down payment) Note unpaid (face P1,000,000) Services completed Probability of collection Continuing franchise fee Period of refund 200,000 200,000 200,000 910,000 200,000 700,000 400,000 550,000 25% 10% 95% 100% Likely Unlikely 1% of NI Likely 1% of NI 12/30/2016 12/30/2016 Unlikely 1% of NI 1% of NI 1/31/2017 2/28/2017 What is the total revenue to be recognized by JANE on December 31, 20x6?
Q: How much total revenue is recognized from the contract in 20x1?
A:
Q: urant. In addition, the agreement required the franchisee to pay 8% royalty based on its gross…
A: A lease is a type of contract in which the actual and legal owner of the asset gives the right to…
Q: Sr. Juan Inc. a franchisor, entered into a franchise agreement with Mang Pedro, franchisee, on March…
A: Franchise Agreement The purpose of providing the franchise agreement is to use the brand and name of…
Q: On Nov. 1, 20x1, DRINK Co. entered into a franchise contract with TIPPLE Co. The franchise agreement…
A: The franchise is a type of contract in which three exists two parties which are franchisor and…
Q: Burger King granted a franchise to Shakers where Shakers will have to pay franchise fee of…
A: Given for question one Shakers where Shakers will have to pay franchise fee of P5,000,000 payable…
Q: On July 1, 20x1, Wash Co. grants a franchise the right to sell Wash Co.’s products in a specific…
A: Revenue recognition is the concept which explains that revenue should be recognized when the…
Q: A franchisor, charges an initial franchise fee of P920,000, with P200,000 paid when the agreement is…
A: Solution: The amount of revenue from franchise fees is = Present value of franchise payments
Q: 1. ABC Island, Inc. charges an initial franchise fee of ₱75,000 for the right to operate as a…
A: Revenue refers to the amount collected or acquired through sale of goods and services. It is…
Q: ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC…
A: Franchise is defined as the business form that includes the existing business allow the third party…
Q: ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC…
A: Franchise is defined as the form of the business that includes the business which is in operation or…
Q: franchise for the sale of a particular product. JANE incurs P600,000 initial direct costs for each…
A: Given:
Q: initial franchise fee
A: The initial franchise fee has to be recognized as revenue only upon the performance of all…
Q: On January 2, Frazier Company purchased a restaurant franchise for $720,200. The terms of the…
A: Solution: Journal entries related to the franchise during the year are as under:
Q: New Era Network Associates has a fi ve-year license to provide networking support services to a…
A: This is a long term contract which spans for more than one accounting period.
Q: Monitor Muffler sells franchise arrangements throughout the United States and Canada. Under a…
A: Franchise arrangement and performance obligation: The franchisor has multiple performance…
Q: Solve the following problem in good accounting form. Burger King granted a franchise to Shakers…
A: The franchise is the right to sell the products or do service of a big renowned company. The company…
Q: Each of Picha Pie Co. 21 new franchisee contracted to pay an initial franchisee of 30,000. By…
A: Deferred or unearned revenue occurs when an organization receives cash for its services but does not…
Q: Mean Dones and Jeremie Jane Roldan Inc. charges an initial franchise fee of P920,00, with P200,000…
A: This question deals with how much revenue should be recorded as the revenue from franchise fee.…
Q: le when the agreement was signed and the balance in five annual payments of P8,000 each. Tam's is…
A: In franchise business, owner of the business which has its business market acceptability along with…
Q: Burger King granted a franchise to Shakers where Shakers will have to pay franchise fee of…
A: The franchise royalty is 5% of the gross amount of sales of the previous month and other franchise…
Q: McDolibee operates and franchises restaurants around the world. On January 1, 20x1, McDolibee…
A: On 01.01.20x1, Mc Dolibee entered into franchise agreement with a franchisee. Non refundable fees =…
Q: On January 1, 20x1, LOMI Ko charges an initial fee of P8,000,000 for the franchise, with P1,600,000…
A: Lets understand the basics. When franchise agreement made between the franchiser and franchisee then…
Q: Chipotle Inc. grants franchisees the right to operate a franchise using the company’s name, menu,…
A: A Promise contained in the contract to transfer the customer Goods or Services that are distinct. a…
Q: ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC…
A: Franchise is a method of distributing product or services between two parts.it includes two parts 1)…
Q: TopChop sells hairstyling franchises. TopChop receives $50,000 from a new franchisee for providing…
A:
Q: Nori Restaurant sold a fast-food restaurant franchise to Irish. The sale agreement, signed on…
A: Step 1: Calculate the present value of two annual payments as follows: MS-Excel -->Formulas…
Q: Max Co. restaurant sold a fast-food restaurant franchise to Irish for a 5-year term. The sale…
A: A lease is a type of contract in which the actual and legal owner of the asset gives the right to…
Q: On January 1, 20x1, LOMI Ko charges an initial fee of P8,000,000 for the franchise, with P1,600,000…
A: Lets understand the basics. When franchise agreement made between the franchiser and franchisee then…
Q: max co. restaurant sold a fast-food restaurant franchise to irish for 5-year term. the sale…
A: It is given that :down payment for franchise – P 100,000 Annual payment – P 50,000 No of payments –…
Q: On January 1, 2014, Heart Company signed an agreement to operate as a franchisee of Ace Company for…
A: Acquisition cost of franchise = cash paid + Present value of future 4 annual payments discounted at…
Q: Pita Pal sells fast-food franchises. Pita Pal receives $79,000 from a new franchisee for providing…
A: Revenue recognition is an accounting principle that helps in knowing when can a revenue be…
Q: Liezl Sangalang Malalaban, Inc. charges an initial franchise fee of P90,000 broken down as follows.…
A: Journal entry - Recording the business transactions in accounting books for the first time. The…
Q: Paris paid Cherry $333,333 on 12/31/2020 for the exclusive right to market a particular product…
A: Net income refers to the amount attained after deducting the sales from cost of goods sold, selling,…
Q: JANE creates a franchise for the sale of a particular product. Jane incurs P600,000 initial direct…
A: Only likely portion of cash to be received in to be recognized
Q: A B C D Cash paid (Down payment) 200,000 200,000 200,000 200,000 Note unpaid (Face…
A: Given: The data is given as,
Q: On Jan. 1, 2020, ABC Corporation entered into a franchise agreement with a P570,000 cash payment as…
A: Franchise is type of business arrangement when rights of use brands and patents are transferred for…
Q: 1. On January 1, 20x4, Drexler signed an agreement to operate as a franchisee of Houston Copy…
A: Answer - Working Note - Calculation of carrying amount of the franchise on December 31, 20x4 -…
Q: Chipotle Inc. grants franchisees the right to operate a franchise using the company’s name, menu,…
A: The initial franchise fees of $250000 will be recorded equally over the period of franchise i.e. 5…
Q: Fred Esquillo, Inc charges an initial franchise fee of P90,000 broken down as follows: Rights to…
A: A franchise is a technique wherein the brand name and know-how of a successful business are shared…
Q: 3. Paris paid Cherry $333,333 on 12/31/2020 for the exclusive right to market a particular product…
A: A patent is an intangible asset, that gives the business a legal right to manufacturing and sell a…
Q: The franchisor charges an initial franchise fee of P110,000 broken down as follows: Right to trade…
A: A frenchise fees is paid by franchisee to franchisor for using the entity's…
Q: Pita Pal sells fast-food franchises. Pita Pal receives $82,000 from a new franchisee for providing…
A: Given in the question: Rachel purchased franchisee on March 1, 2021. Training, equipment and…
Q: Jan. 1, 2020, ABC Corporation entered into a franchise agreement with a P570,000 cash payment as…
A: Revenue recognition : revenue recognition for customer services will be recognise when the services…
Q: 1. On January 1, 20x4, Drexler signed an agreement to operate as a franchisee of Houston Copy…
A: Intangible Related Expenses for the end of December 31 20x4 Franchise and Licenses Down…
Q: On January 1, 20x1, Marc Company enters into a contract with a customer to transfer a license.…
A: Transaction price refers to the consideration amount which the entity expects to get for…
Q: ABC Franchisor entered into a franchise contract that will allow the franchisee to use ABC's…
A: Franchise: A method of distributing goods or services that involves a franchisor, who establishes…
Q: ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC…
A: Explanation: Franchise fee 1000,000 Direct cost (30, 000 + 3,00,000) (330,000) Deferred…
Q: AA, BB, and CC agree to sell construction tools for a period of one month. AA agrees to construct a…
A: Joint operation: When two or more people or entities tie up to perform a business operation for a…
Q: On January 1, 20x1, Sunbathe Co. enters into a contract with a customer to transfer a license. The…
A:
Q: Collins, Inc., entered into a 10-year franchise agreement with an individual. For an initial…
A: The franchisor can generate revenue by way of initial franchise fees or continuing franchise fees.…
What is the total revenue to be recognized by JANE on December 31, 20x6?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- On Jan. 1, 2020, ABC Corporation entered into a franchise agreement with a P570,000 cash payment as initial franchise fee. The fee covers the initial services with the following stand- alone prices. Location identification Market Study P 150,000 Manager Training APIZ Employee Training P 50,000 200,000 ABC charges a mark-up on cost of 25% when it computes the stand-alone prices of all its services. On Jan 31, 2020, ABC 200,000 a has completed the location identification and market study. How much is the gross profit from the franchise to be reported warning with mandatory dotyvolalain tensprejto in the income statement for January 2020?spension to dismissal/ non-readmission withOn Jan. 1, 2020, ABC Corporation entered into a franchise agreement with a P570,000 cash payment as initial franchise fee. The fee covers the initial services with the following stand- alone prices. Location identification Market Study P 150,000 Manager Training 200,000 P 50,000 Employee Training ABC charges a mark-up on cost of 25% when it computes the stand-alone prices of all its services. On Jan 31, 2020, ABC has completed the location identification and market study. How much is the gross profit from the franchise to be reported in the income statement for January 2020? 200,000You contacted costa who agreed to allow you to use their name and sell their products with an annual fee of OMR15 ,000. This is an example of; a. Service business b. Mining c. Franchise d. wholesaling
- Sr. Juan Inc. a franchisor, entered into a franchise agreement with Mang Pedro, franchisee, on March 31, 20x1. The total franchise fee is P500,000 of which P100,000 is payable upon signing and the balance was represented by a 10% interest bearing note payable in four equal annual installments. The down payment is non-refundable and represent a fair measure of service already performed. The five year franchise license provides Mang Pedro the right to use because the license to which Mang Pedro has rights will not change over the term of the license. On April 10, 20x1, Sr. Juan transfers the rights and provided all the necessary services required in the contract. Mang Pedro started its operation on April 12, 20x1. Case 1: What is the total revenue to be recorded on July 1, 20x1? Case 2: Which of the following statement is correct? a. A credit to interest income amounting to P13,333 b. A credit to Franchise Revenue of P100,000 on April 10, 20x1 c. A credit to Franchise Revenue…The franchisor charges an initial franchise fee of P110,000 broken down as follows: Right to trade name, market, know-how P 50,000 Training services 20,000 Equipment (Cost of P10,800) 40,000 Total initial franchise fee P110,000 Upon signing of the agreement, a payment of P70,000 is due. Thereafter, two annual payments of P30,000 are required. The credit rating of the franchisee is such that it would have to pay interest of 8% to borrow money. The franchise agreement is signed on August 1, 2019, and the franchise commences operation on November 1, 2019. Assuming that no future services are required by the franchisor once the franchise begins operations, determine the net income reported on December 31, 2019. a. 99,200 b.125,180 c. 114,380 d. 112,600McDolibee operates and franchises restaurants around the world. On January 1, 20x1, McDolibee entered into a franchise agreement with a franchisee. As part of its franchise agreement, McDolibee requires the franchise to pay a nonrefundable upfront franchise fee of P190,000 upon opening a restaurant and ongoing payment of royalties, based on 10% of franchisee's sales. As part of the franchise agreement, McDolibee provides pre-opening services, including supply and installation of cooking equipment and cash registers, valued at P60,000, which is the stand-alone selling price of the pre-opening services. In addition, the franchise agreement includes a license of Intellectual Property such as McDolibee's trademark and trade name to the franchisee. McDolibee has determined the stand-alone selling price of the license is P140,000. The franchise agreement. On January 1, 20x1, the franchisee paid the nonrefundable upfront franchise fee of P190,000 to McDolibee. McDolibee evaluates the…
- The franchisor charges an initial franchise fee of P110,000 broken down as follows: Right to trade name, market, know-how P 50,000 Training services Equipment (Cost of P10,800) Total initial franchise fee 20,000 40,000 P110,000 Upon signing of the agreement, a payment of P70,000 is due. Thereafter, two annual payments of P30,000 are required. The credit rating of the franchisee is such that it would have to pay interest of 8% to borrow money. The franchise agreement is signed on August 1, 2019, and the franchise commences operation on November 1, 2019. Assuming that no future services are required by the franchisor once the franchise begins operations, the entry on August 1, 2019 would include:The franchisor charges an initial franchise fee of P110,000 broken down as follows: Right to trade name, market, know-how P 50,000 Training services Equipment (Cost of P10,800) Total initial franchise fee 20,000 40,000 P110,000 Upon signing of the agreement, a payment of P70,000 is due. Thereafter, two annual payments of P30,000 are required. The credit rating of the franchisee is such that it would have to pay interest of 8% to borrow money. The franchise agreement is signed on August 1, 2019, and the franchise commences operation on November 1, 2019. Assuming that no future services are required by the franchisor once the franchise begins operations, the entry on August 1, 2019 would include:Please answert it in good accounting form. Thankyou Problem 5SHAWARMA Inc. sells franchises to independent operators. The contractwith the franchise includes the following provisions: 1. The franchise is charged an initial franchise fee of P120,000. Of this amount, P20,000 is payable when the agreement is signed and a P20,000, zero-interest bearing note, payable at the end of 5 subsequent years.2. All of the initial franchise fee collected by the company is to be refunded and the remaining obligation cancelled if, for any reason, the franchise becomes unprofitable.3. In return, for the initial franchise fee, the franchisor agrees to (a) assist the franchisee in selecting the location for the business, (b) negotiate the lease of the land, (c) obtain financing and assist with building design, (d) supervise construction, establish accounting and tax records, and (f) provide expert advice over a 5-year period relating to such matters as employee and management training, quality, control…
- Momong Company sells a franchise with initial franchise fee of P70,000. A downpayment of P20,000 cash is required, with the balance covered by issuance of P50,000, 10% note payable in five equal annual installments . Question: If all material services have been substantially performed, collectibility of note is reasonably assured, but the refund period has not expired, what is the journal entry to record the transaction: Group of answer choices a. Debit Cash- P20,000; Debit Notes receivable - P50,000; Credit Franchise fees - P20,000; Credit Unearned franchise fees - P50,000 b. Debit Cash - P20,000; Debit Notes receivable - P50,000; Credit Unearned franchise fees - P70,000 c. Debit Cash - P20,000; Debit Notes receivable - P50,000; Credit Franchsie fees - P50,000; Credit Unearned franchise fees - P20,000 d. Debit Cash - P20,000; Debit Notes receivable - P50,000; Credit Franchise fees - P70,000ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC receives 1,000,000 in exchange for satisfying the following separate performance obligations: franchisees have a ten-year right to operate as an ABC retail establishment once it started its operation; franchisees receive an ABC building and necessary equipment; franchisees receive initial training and certification as an ABC retail. The 1,000,000 is payable with a down payment of P500,000 on August 1, 2021 with the balance will be payable in five equal annual payments with an interest of 10% starting January 1, 2022. The stand-alone selling price of the initial training and certification is P100,000 and P400,000 for the building and equipment. ABC estimates that the stand-alone selling price of the ten-year right to operate as a franchise using the residual approach. ABC received P500,000 on August 1, 2021 from DDD, which represent the collection from the training, building and…ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC receives 1,000,000 in exchange for satisfying the following separate performance obligations: franchisees have a ten year right to operate as an ABC retail establishment once it started its operation; franchisees receive an ABC building and necessary equipment; franchisees receive initial training and certification as an ABC retail. The 1,000,000 is payable with a down payment of P500,000 on August 1, 2021 with the balance will be payable in five equal annual payments with an interest of 10% starting January 1, 2022. The stand-alone selling price of the initial training and certification is P100,000 and P400,000 for the building and equipment. ABC estimates that the stand-alone selling price of the ten-year right to operate as a franchise using the residual approach. ABC received P500,000 on August 1, 2021 from DDD, which represent the collection from the training, building and…