On December 31, 2023
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4.)
On December 31, 2023, Peter Company signed an agreement to operate as franchise of Wendy’s for a franchise fee of P80,000. Of this amount, P30,000 was paid upon signing of the agreement and the balance is payable in five annual payments of P10,000 each beginning December 31, 2023. The present value of the five payments, at an appropriate rate of interest, is P36,000 on December 31, 2023. The agreement provides that the down payment is not refundable, and no future services are required of the franchisor. The collection of the note receivable is reasonably certain. Wendy’s Company should report unearned revenue from franchise fee in its December 31, 2023, balance sheet at:
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- 1.) On November 30, 2022, Loveless Company authorized NBSB Corp. to operate as a franchisee for an initial franchise fee of P1,950,000. Of his amount, P750,000 was received upon signing the agreement, and the balance, represented by a note, is due in four annual payments starting November 30, 2023. Present value of P1 at 12% for 4 periods is 0.6355. Present value of an ordinary annuity of P1 at 12% for 4 periods is 3.0374. The period of refund will elapse on January 31, 2023. The franchisor has performed substantially all the initial services, but the operations of the store have yet to start. Collectability of the note is reasonably certain. Required: a.) How much is the unearned franchise fee on the year ended December 31, 2022?b.) How much is the earned franchise fee for the year ended December 31, 2022?1. On December 31, 2020, Rice, Inc. authorized Graft to operate as a franchisee for an initial franchise fee of P150,000. Of this amount, P60,000 was received upon signing of the agreement and the balance, represented by a note, is due in three annual payments of P30,000 each beginning December 31, 2021. The present value on December 31,2020 of the three annual payments appropriately discounted is P72,000. According to the agreement, the non- refundable down payment represents a fair measure of the services already performed by Rice; however, substantial future services are required of Rice. Collectability of the note is reasonably certain. a. in Rice’s December 31, 2020 balance sheet, unearned franchise fees from Graft’s franchise should be reported as?1. On December 31, 2020, Rice, Inc. authorized Graft to operate as a franchisee for an initial franchise fee of P150,000. Of this amount, P60,000 was received upon signing of the agreement and the balance, represented by a note, is due in three annual payments of P30,000 each beginning December 31, 2021. The present value on December 31,2020 of the three annual payments appropriately discounted is P72,000. According to the agreement, the non-refundable down payment represents a fair measure of the services already performed by Rice; however, substantial future services are required of Rice. Collectability of the note is reasonably certain. a. in Rice’s December 31, 2020 balance sheet, unearned franchise fees from Graft’s franchise should be reported as? 2. Levi and Zeke agreed on a joint venture to purchase and sell car accessories. Their contract stipulates that the participants shall contribute P25,000 each to be used in purchasing the merchandise, share equally in any gain or…
- Pizza Pie Inc. entered into a franchise agreement on December 31, 2029, giving Freshly Bake Corp. the right to operate as a franchise of Pizza Pie for 5 years. Pizza Pie charged Freshly Bake an initial franchise fee of P50,000 for the right to operate as a franchisee. Of this amount P20,000 is payable when the food fight signs the agreement, and the note balance is payable in five annual payments of P6,000 each starting on December 31, 2020, as part of the arrangement. Pizza helps locate the site, negotiate the lease or purchase of the site, supervise the construction activity, and provide employee training and the equipment necessary to be a distributor of its products. Similar training services and equipment are sold separately. Freshly Bake also promises to pay ongoing royalty payments of 1% of its annual sales (payable each Jan. 31 of the following year) and is obliged to purchase products from pizza at its current stand-alone selling price at the same time of purchase. The credit…2. On January 1, 2020, an entity granted a franchise agreement to a franchisee. The contract provided that the franchisee shall pay an initial franchise fee of P500,000 and on-going payment of royalties equivalent to 8% of the sales of the franchisee. On January 1, 2020, the franchisee paid down payment of P200,000 and issued a 3-year noninterest bearing note for the balance payable in three equal annual installments starting December 31, 2020. The note has present value of P240,183 with effective interest rate of 12%. On June 30, 2020, the entity completed the performance obligation of the franchise at a cost of P352,146. Aside from that, the entity incurred indirect cost of P22,009. The franchisee started operation on July 1, 2020 and reported sales revenue amounting to P50,000 for the year ended December 31, 2020. The franchisee paid the first installment on its due date.On April 1, 2022, Pink Company signed an agreement to operate as a franchisee for a franchise fee of P5,000,000. Of this amount, P2,000,000was paid when the agreement was signed and the balance is payable in six semi-annual payments of P500,000 every Dec. 31, and June 30. The first payment is due on Dec. 31, 2021. Pink Company's credit rating indicates that it can borrow money at 8% per annum for a loan of this type. Information on present value factors (PV) are: *PV of an ordinary annuity of 1 at 8% for 3 periods - 2.5771 *PV of an ordinary annuity of 1 at 4% for 6 periods - 5.2421 What is the cost of Franchise acquired on April 1, 2022?
- On December 31, 2019, Pepe Company signed an agreement to operate as franchise of Annie’s for afranchise fee of P80,000. Of this amount, P30,000 was paid upon signing of the agreement and thebalance is payable in five annual payments of P10,000 each beginning December 31, 2019. Thepresent value of the five payments, at an appropriate rate of interest, is P36,000 on December 31,2019. The agreement provides that the down payment is not refundable, and no future services arerequired of the franchisor. The collection of the note receivable is reasonably certain. Annie’sCompany should report unearned revenue from franchise fee in its December 31, 2019, balance sheetat:On January 1, 2022, Heeseung Ramen Shop granted a franchise to a franchisee. The franchise agreement required the franchisee to pay a nonrefundable upfront fee in the amount of P550,000. The franchisee paid the upfront fee immediately on January 1, 2022. A continuing franchise fee of 10% based on annual sales is to be paid by the franchisee. It is the obligation of Heeseung Ramen Shop to construct a franchise stall, provide the franchisee a right to access the trade name for a period of five years and to deliver 10,000 kg. of ramen noodles to the franchisee. On October 1, 2022, Heeseung already finished construction of the stall. During 2022, 2,000 kilos of ramen noodles were delivered. The franchisee reported sales of P2,000,000 during 2022. The stand-alone prices are determined as follows: · Tradename – P400,000 · Ramen noodles – P150,000 · Stall – Not directly observable Based on the current market conditions, it was estimated that a customer in the market is willing…American Food Services, Inc., acquired a packaging machine from Barton and Barton Corporation. Barton and Barton completed construction of the machine on January 1, 2021. In payment for the $4.8 million machine, American Food Services issued a four-year installment note to be paid in four equal payments at the end of each year. The payments include interest at the rate of 12%. (FV of $1, PV of $1, FVA of $1, PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entry for American Food Services' purchase of the machine on January 1, 2021. 2. Prepare an amortization schedule for the four-year term of the installment note. 3. Prepare the journal entry for the first installment payment on December 31, 2021. 4. Prepare the journal entry for the third installment payment on December 31, 2023. Complete this question by entering your answers in the tabs below. Req 2 Reg 13 and 4 Prepare an amortization schedule for the…
- On November 30, 2019, Garry Company authorized BSCO Corp. to operate as a franchisee for aninitial franchise fee of P1,950,000. Of his amount, P750,000 was received upon signing the agreementand the balance, represented by a note, is due in four annual payments starting November 30, 2020.Present value of P1 at 12% for 4 periods is 0.6355. Present value of an ordinary annuity of P1 at 12%for 4 periods is 3.0374. The period of refund will elapse on January 31, 2020. The franchisor hasperformed substantially all the initial services, but the operations of the store have yet to start.Collectability of the note is reasonably certain.a. How much is the unearned franchise fee on the year ended December 31, 2019?b. How much is the earned franchise fee for the year ended December 31, 2019?On January 2, 2020, Cluckin' Bells Company entered into a franchise agreement with Mr. Princeton to sell their products. The agreement provides for an initial franchise fee of P2,500,000, payable as follows: P700,000 cash to be paid upon signing of the contract, and the balance in five equal annual payments every December 31, starting December 31, 2020. Cluckin' Bells Company signs 15% interest bearing note for the balance. The agreement further provides that the franchisee must pay a continuing franchise fee equal to 5% of its monthly gross sales. On October 29, the franchisor completed the initial services required in the contract at a costs of P800,000, and incurred indirect costs of P160,000. The franchisee commenced business operations on November 2, 2020. The gross sales reported to the franchisor are November sales, P82,000 and December sales, P95,000. The first installment payment was made in due date. The collectability of the note is reasonably assured. 19. In its income…On July 01, 2022, Honesty Corporation sold a set of washing machine and a dryer for a total contract price of P200,000. The stand-alone selling prices of the washing machine and the dryer if sold separately are: 150,000 and 70,000, respectively. A 20% down payment was made and the balance is payable in six (6) equal installment payments of P28,564, inclusive of 2% interest, payable quarterly starting September 30 and December 31, 2022. How much is the total amount of interest earned in 2022? P3,200 P3,794.67 P5,892.72 P6,400
