SAPPHIRE CO. charges new franchisees an initial fee of P5,000,000. Of this amount, P2,000,000 is payable in cash when the agre
Q: Sunland Inn charges an initial fee of $ 2,448,000 for a franchise, with $ 489,600 paid when the…
A: The advertising fee is paid for 5 years i.e., for 60 months. Advertising fee for 60 months = 60 x…
Q: On December 31, 2020, Rice, Inc. authorized Graft to operate as a franchisee for an initial…
A: Unearned Franchise Fees:-It is an amount for which the company has performed services but does not…
Q: migos Burrito Inc. sells franchises to independent operators throughout the northwestern part of the…
A: Franchise: Franchise is the right to sell a company’s product with the specified terms and…
Q: rm the related installation service and provide a tech support for three-year period. AGI sells the…
A: ANS(A) As per given details please refer below answer :- For the sale of software there are three…
Q: Initial franchise fee charge of NAM of P1,700,000, requiring a P420,000 down payment when the…
A: Franchise fees=P1,7000,000 Down payment made=P420,000 Present value discounted at 10%=P1,014,000…
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: On December 1, 20x1, ABC Co. enters into a franchise contracts with XYZ, Inc. The franchise provides…
A: Franchise Accounting: It is as simple and the same as general accounting. A franchisee is a person…
Q: Dominador's Pizza Inc. enters into a franchise agreement on December 31, 20x7 giving Doming Corp.…
A: Answer - Part 8 - Correct Option is Option - A Zero . Because, As of December 31, 20x7, Revenue…
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: On December 1, 20x1, ABC Co. enters into a franchise contracts with XYZ, Inc. The franchise provides…
A: Franchise agreement is a legal contract between the franchisor and the franchisee. Under…
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: Hope Corp. sells a franchise for an initial fee of P1,400,000. A down payment of P400,000 is…
A: When the capability of note is reasonably assured, the journal entry would be debit of cash and…
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: tive's trade name and sell Native's products for 10 years. In addition, Native also promises to…
A: Journal entries are by far one of the most critical skills to master in order to pursue a career in…
Q: Tullis Construction enters into a long - term fixed price contract to build an office tower for…
A: Percentage of completion=Cost incurred till dateEstimated cost to…
Q: Watts Inc. charges an initial franchise fee of P690,000, with P150,000 paid when the agreement is…
A: Revenue is the amount of money earned from anything like sales, services etc. It is the gross amount…
Q: 1. On December 31, 2020, Rice, Inc. authorized Graft to operate as a franchisee for an initial…
A: “Since you have posted a many questions, we will solve first question for you. To get the remaining…
Q: ent year, Goldilocks Inc. signed an agreement to operate as a franchise of Cafe for an initial…
A: Acquisition cost refers to the expenses born by an entity in acquiring an asset.
Q: Mean Dones and Jeremie Jane Roldan Inc. charges an initial franchise fee of P920,00, with P200,000…
A: Solution Dear student as per Q&A guideline we are required to answer the first question only .…
Q: Tam's Pizza, Inc. charges an initial franchise fee of P50,000 for the right to operate as a…
A: From the perspective of the Franchisor to earn the amount of revenue from the franchise contract…
Q: Kami, Inc. charges an initial franchise fee of P500,000 for the right to operate to operate as a…
A: The franchise revenue is recognized at the time of providing service and the payment of the…
Q: Jan. 1, 2022, ABC Corporation would be entering into an outsourcing contract which requires payment…
A: Equivalent annual cost can be found from the present value of all cost and calculating the present…
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: On January 1, 20x1, Marc Company enters into a contract with a custome franchise fee is P200,000,…
A: The license is sold here with the down payment and four installments. The Franchise fee was…
Q: Frozen Delight, Inc. charges an initial franchise fee of $75,000 for the right to operate as a…
A: Date Account Titles and Explanation Debit Credit April 1, 2017 Cash $25,000…
Q: Mean Dones and Jeremie Jane Roldan Inc. charges an initial franchise fee of P920,00, with P200,000…
A: solution given Initial franchise fee 920000 Payment on date of agreement 200000 The…
Q: Please answer in good accounting form. Thankyou SAPPHIRE CO. charges new franchisees an initial…
A: Franchising seems to be a method of selling or delivering products or services. There is an…
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: At the beginning of current year, Seashore Company signed an agreement to operate as a franchisee…
A: Present value means the actual amount is adjusted with the interest rate so as to get the present…
Q: n January 1, 20x1, Sunbathe Co. enters into a contract with a customer to transfer a license. The…
A: Cash downpayment 20,000 PV of remaining payments 60,746 (20000*3.0373) = Initial…
Q: Dominador's Pizza Inc. enters into a franchise agreement on December 31, 20x7 giving Doming Corp.…
A: Franchise Accounting In the franchise Accounting the recognition of performance obligation is…
Q: Jolibi, Inc. enters into an agreement with Ronald’s Co., clothing the later with full authority to…
A: Step 1 - The initial Franchise revenue can only be recorded when the franchiser has established…
Q: Frozen Delight, Inc. charges an initial franchise fee of $75,000 for the right to operate as a…
A: Date Account Titles and Explanation Debit Credit April 1, 2020 Cash $25,000…
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: 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: On January 1, 2030, ABC granted a 3 year franchise contract with XYZ. The terms of the contract are…
A: Franchise Agreement In simple word the word franchise agreement which is described as legal…
Q: Manong Nilaga, a renowned franchisor under McJabi Group of Companies, sells franchise arrangements…
A: A franchise is an agreement in which there are two parties involved which is the franchisor (who is…
Q: NAPA WINERY charges an initial fee of P5M for a franchise with P2M paid when the agreement is signed…
A: NAPA WINERY's Charges an initial fees = P5000000 Paid franchise fees = P2000000 Balance fees =…
Q: Pacific Crossburgers Inc. charges an initial fee of P70,000. Upon the signing of the agreement…
A: Journal entry: It is the duty of the accountant to record and summarize business economic and…
Q: On Jan. 1, 20x1, Hurt Co. entered into a franchise agreement with Hero Co. The franchise contract…
A: Franchise business is done mainly to increase its market share or geographical reach at low costs. A…
Q: In January 2018, Continental Fund Services, Inc., enters into a one-year contract with a client to…
A: The formula to compute transaction price as follows:
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: Dominador's Pizza Inc. enters into a franchise agreement on December 31, 20x7 giving Doming Corp.…
A: Franchise Revenue To recognize the franchise revenue is one of the important task of the franchise…
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: 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.…
SAPPHIRE CO. charges new franchisees an initial fee of P5,000,000. Of this amount, P2,000,000 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 an interest-bearing promissory note. In consideration therefore, SAPPHIRE CO. will assist in locating the business site, conduct a market study to estimate earnings potential, supervise construction of a building, and provide initial training to employees.
On December 3, 2021, Sapphire Co. entered into a franchising agreement
with EMERALD, INC. by the end of the year, SAPPHIRE CO. has completed
about 25% of the initial services at a cost of P300,000 and it has
ascertained that collection of the notes is reasonably assured.
For 2021, SAPPHIRE CO. should recognized franchise revenue of:
A. 5,000,000 C. 1,700,000
B. 2,000,000
Step by step
Solved in 2 steps
- Please answer in good accounting form. Thankyou SAPPHIRE CO. charges new franchisees an initial fee of P5,000,000. Of this amount, P2,000,000 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 an interest-bearing promissory note. In consideration therefore, SAPPHIRE CO. will assist in locating the business site, conduct a market study to estimate earnings potential, supervise construction of a building, and provide initial training to employees. On December 3, 2021, Sapphire Co. entered into a franchising agreement with EMERALD, INC. by the end of the year, SAPPHIRE CO. has completed about 25% of the initial services at a cost of P300,000 and it has ascertained that collection of the notes is reasonably assured. For 2021, SAPPHIRE CO. should recognized franchise revenue of:A. 5,000,000 C. 1,700,000B. 2,000,000Accurate 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?Pacific Crossburgers Inc. charges an initial fee of P70,000. Upon the signing of the agreement (which covers 3 years), a payment of P28,000 is due. Thereafter, three (3) annual payments of P14,000 are required. The credit rating of the franchisee is such that it would have to pay interest at 10% to borrow money. The franchise agreement signed on May 1, 20x5, and the franchise commences operation on July 1, 20x5. Assuming that the total franchise fee includes training services (with a value of P2,400) for the period leading up to the franchise opening and for two (2) months following opening.
- Watts Inc. charges an initial franchise fee of P690,000, with P150,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10%, is P409,400. The franchisee has the option to purchase P90,000 of equipment for P70,000. Watts has substantially provided all initial services required and collectability of the payments is reasonably assured. The amount of revenue from franchise fees is?Kami, Inc. charges an initial franchise fee of P500,000 for the right to operate to operate as a franchise of Kami. Of this amount, P100,000 is payable when the agreement was signed and the balance is payable in a noninterest bearing note in five annual payments of P80,000 each. In return for the initial franchise fee, the franchisor will help locate the site, negotiate the lease or purchase of the site, supervise the construction activity, and provide the bookkeeping services. The credit rating of the franchisee indicates that money can be borrowed at 8%. The present value of an ordinary annuity of five annual receipts of P80,000 each discounted at 8% is P319,416.80. The discount represents the interest revenue to be accrued by the franchisor over the payment period. If the probability of refunding the initial franchise fee is extremely low, the amount of future services to be provided to the franchisee is minimal, collectability of the note is reasonably assured and substantial…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…
- Pacific Crossburgers Inc. charges an initial franchise fee of $70,000. Upon the signing of the agreement (which covers 3 years), a payment of $28,000 is due. Thereafter, three annual payments of $14,000 are required. The credit rating of the franchisee is such that it would have to pay interest at 10% to borrow money. The franchise agreement is signed on May 1, 2020, and the franchise commences operation on July 1, 2020. Instructions Prepare the journal entries in 2020 for the franchisor under the following assumptions. (Round to the nearest dollar.) a. No future services are required by the franchisor once the franchise starts operations. b. The franchisor has substantial services to perform, once the franchise begins operations, to maintain the value of the franchise. c. The total franchise fee includes training services (with a value of $2,400) for the period leading up to the franchise opening and for 2 months following opening.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…On January 1, 20x1, Marc Company enters into a contract with a customer to transfer a license. The initial franchise fee is P200,000, payable as follows: 20% cash down payment upon signing of the contract, and the balance is payable in four (4) equal annual installments starting December 31, 20X1. The appropriate discount rate is 10%. The contract also requires Marc Company to transfer equipment to the customer. The equipment has a cost of P30,000 and a stand-alone selling price of P50,000. The license has a stand-alone selling price of P38,000. Marc Company regularly sells the license and the equipment separately. The equipment is transferred to the customer on January 15, 20x1, while the license is transferred to the customer on February 1, 20x1. REQUIRED: Compute the following: 1. Total transaction price 2. Transaction price allocated to license 3. Transaction price allocated to equipment 4. Franchise fee revenue
- On January 1, 20x1, Marc Company enters into a contract with a customer to transfer a license. The initial franchise fee is P200,000, payable as follows: 20% cash down payment upon signing of the contract, and the balance is payable in four (4) equal annual installments starting December 31, 20X1. The appropriate discount rate is 10%. The contract also requires Marc Company to transfer equipment to the customer. The equipment has a cost of P30,000 and a stand-alone selling price of P50,000. The license has a stand-alone selling price of P38,000. Marc Company regularly sells the license and the equipment separately. The equipment is transferred to the customer on January 15, 20x1, while the license is transferred to the customer on February 1, 20x1. REQUIRED: Total transaction price Transaction price allocated to license Transaction price allocated to equipment Franchise fee revenuePina Universe charges an initial franchise fee of $ 234,000. Upon the signing of the agreement, a payment of $ 26,000 is due. Thereafter, 5 annual payments of $ 41,600 are required. The credit rating of the franchisee is such that it would have to pay interest at 9% to borrow money. The franchise agreement is signed on August 1, 2020, and the franchise commences operation on October 1, 2020. Prepare the journal entries in 2020 for the franchisor under the following assumptions. a. No future services are required by the franchisee once the franchise starts operations. b. The franchisor has substantial services to perform, once the franchise begins operations, to maintain the value of the franchise. c. The total franchise fee includes training services (with a value of $ 6,900) for the period leading up to the franchise opening and for 2 months following openingThe 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. 112,600