Mark and his partners have contracted to purchase the franchise rights, worth $123,000, to open and operate a specialty pizza restaurant called Pepperoni's. With a renewable agreement, the partners have agreed to make payments at the beginning of every six months for five years. To accommodate the renovation period, Pepperoni's corporate office has agreed to allow the payments to start in one year, with interest at 14.36% compounded annually. a) What is the future value of the franchise after the deferral period? b.) What is the size of the payment required?
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- ted and his partners have contracted to purchase the franchise rights, worth $60000, to open and operate a specialty pizza restaurant called Pepperoni's. With a renewable agreement, the partners have agreed to make payments at the beginning of every three months for two years. To accommodate the renovation period, Pepperoni's corporate office has agreed to allow the payments to start in one year, with interest at 11.45 % compounded annually. What is the amount of each payment?On January 1, 20x6, BUNNY, a real estate company, entered into a contract to construct a subdivision on a piece of land it has acquired and, when construction is complete, to deliver the finished houses to their customers. The following information pertains to the said contract each customer is to sign. Each house costs 4,000,000 each (a total of 10 houses are to be constructed). Construction will take 2 years to complete. Payment terms are 50% by the end of the 1st year, 25% at the end of the 2nd year and the balance will be paid after 3 months from the final turn-over. The client can transfer the contract to another, should they not feel satisfied with the house on or before the house is 50% complete. The company incurred the following expenses for 20x6. Total cost of land- 2,000,000 Estimated total cost of construction - 25,000,000 (including the costs for the common areas, streets and light posts amounting to 5,000,000); Estimated total cost of contract for the 10 houses -…AD Construction, a property developer, is building a property complex consisting of 50 apartments. Apartments are similar in size and proportion - however, can be adapted to suit client needs. AD Construction enters into a contract with customer A. The client wants to buy an apartment and agrees to a total price of CU100,000 per apartment. The payment schedule is as follows:- After signing the contract, clients pay a deposit of CU 10,000 each.- Milestone: 1 year before the planned completion, AD Construction will send a progress report to the client and the client will have to pay CU 50,000 each.- Completion: After construction is completed, the legal ownership of the apartment is transferred to the client and they pay the remaining amount of CU40,000 each. The assumed construction period is 2 years from the contract date. AD Construction has the right to withhold payment from any client in the event that that client fails to pay for the contract prior to its completion. There is no…
- AD Construction, a property developer, is building a property complex consisting of 50 apartments. Apartments are similar in size and proportion - however, can be adapted to suit client needs. AD Construction enters into a contract with customer B. The client wants to buy an apartment and agrees to a total price of CU100,000 per apartment. The payment schedule is as follows: After signing the contract, clients pay a deposit of CU 10,000 each. Milestone: 1 year before the planned completion, AD Construction will send a progress report to the client and the client will have to pay CU 50,000 each. Completion: After construction is completed, the legal ownership of the apartment is transferred to the client and they pay the remaining amount of CU40,000 each. The assumed construction period is 2 years from the contract date. AD Construction has the right to withhold payment from any client in the event that that client fails to pay for the contract prior to its completion. The contract…On January 1, 20x6, BUNNY, a real estate company, entered into a contract to construct a subdivision on a piece of land it has acquired and, when construction is complete, to deliver the finished houses to their customers. The following information pertains to the said contract each customer is to sign. Each house costs P4,000,000 each (a total of 10 houses are to be constructed). Construction will take 2 years to complete. Payment terms are 50% by the end of the 1" year, 25% at the end of the 2nd year and the balance will be paid after 3 months from the final turn-over. The client can transfer the contract to another, should they not feel satisfied with the house on or before the house is 50% complete. The company incurred the following expenses for 20x6. Total cost of land - P2M; Estimated total cost of construction - P25M, (including the costs for the common areas, streets and light posts amounting to P5M); Estimated total cost of contract for the 10 houses-P40M; In CY 20x5, total…On January 1, 20x6, BUNNY, a real estate company, entered into a contract to construct a subdivision on a piece of land it has acquired and, when construction is complete, to deliver the finished houses to their customers. The following information pertains to the said contract each customer is to sign. Each house costs P4,000,000 each (a total of 10 houses are to be constructed). Construction will take 2 years to complete. Payment terms are 50% by the end of the 1" year, 25% at the end of the 2nd year and the balance will be paid after 3 months from the final turn-over. The client can transfer the contract to another, should they not feel satisfied with the house on or before the house is 50% complete. The company incurred the following expenses for 20x6. Total cost of land – P2M; Estimated total cost of construction – P25M, (including the costs for the common areas, streets and light posts amounting to P5M); Estimated total cost of contract for the 10 houses - P40M; In CY 20x6, total…
- On January 1, 20x6, BUNNY, a real estate company, entered into a contract to construct a subdivision on a piece of land it has acquired and, when construction is complete, to deliver the finished houses to their customers. The following information pertains to the said contract each customer is to sign. Each house costs P4,000,000 each (a total of 10 houses are to be constructed). Construction will take 2 years to complete. Payment terms are 50% by the end of the 1 year, 25% at the end of the 2nd year and the balance will be paid after 3 months from the final turn-over. The client can transfer the contract to another, should they not feel satisfied with the house on or before the house is 50% complete. The company incurred the following expenses for 20x6. Total cost of land-P2M; Estimated total cost of construction - P25M, (including the costs for the common areas, streets and light posts amounting to PSM); Estimated total cost of contract for the 10 houses - P40M; In CY 20x6, total…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 Unearned Revenue at December 31, 2021? 3. How much is the Revenue to be recognized in 2022?Joyce purchased the building in which their corporate office is housed on 1/1/21 for $4,700,000. They put down $1,500,000 cash and had to borrow the remaining amount at 6% over a 20-year term. At the time of the purchase, they had the option to lease the building. The 20-year lease would begin on 1/1/21, and called for an immediate payment of $100,000 and then payments of $450,000 beginning on 12/31/21 for the first 10 years and payments of $300,000 beginning on 12/31/31 for the remaining 10 years of the lease. La Fleur had the option to purchase the building for $1 at the end of the lease. Did the CFO make the right decision by purchasing the building? Why or why not? Show your work.
- 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?Present in good form On January 1, 20x6, BUNNY, a real estate company, entered into a contract to construct a subdivision on a piece of land it has acquired and, when construction is complete, to deliver the finished houses to their customers. The following information pertains to the said contract each customer is to sign. Each house costs P4,000,000 each (a total of 10 houses are to be constructed), Construction will take 2 years to complete. Payment terms are 50% by the end of the 1" year, 25% at the end of the 2 year and the balance will be paid after 3 months from the final turn-over. The client can transfer the contract to another, should they not feel satisfied with the house on or before the house is 50% complete. The company incurred the following expenses for 20x6,Total cost of land ~ P2M; Estimated total cost of construction ~ P25M, (including the costs for the common areas, streets and light posts amounting to P5M); Estimated total cost of contract for the 10 houses ~ P40M;…On January 1, 2024, Nath-Langstrom Services, Incorporated, a computer software training firm, leased several computers under a two- year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual Interest rate of 4%. • The contract calls for four rent payments of $16,000 each, payable semiannually on June 30 and December 31 each year. • The computers were acquired by ComputerWorld at a cost of $102,000 and were expected to have a useful life of six years with no residual value. . Both firms record amortization and depreciation semiannually. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. Prepare appropriate Journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate Journal entries recorded by ComputerWorld Leasing for the first year of the lease. Complete this question by entering your answers…