On Jan 1, 2021, an entity grants a franchisee the right to operate a restaurant using its trade name for a 3 year period. The franchise agreement states an initial franchise fee of Php700,000, which includes Php100,000 for kitchen equipment which the entity will purchase for the franchisee plus a 10% royalty based on the franchisee's sales. The entity promise to undertake activities to support the franchise. The entity delivers the equipment on Feb 1, 2021. The restaurant opens on March 1, 2021 at which date the license period starts to run. The franchisee reports sales of Php3,000,000.00 for the year.

On Jan 1, 2021, an entity grants a franchisee the right to operate a restaurant using its trade name for a 3 year period. The franchise agreement states an initial franchise fee of Php700,000, which includes Php100,000 for kitchen equipment which the entity will purchase for the franchisee plus a 10% royalty based on the franchisee's sales. The entity promise to undertake activities to support the franchise. The entity delivers the equipment on Feb 1, 2021. The restaurant opens on March 1, 2021 at which date the license period starts to run. The franchisee reports sales of Php3,000,000.00 for the year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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