On January 1, 2020, Franchisee Inc. enters into a contract with Italian Fine Dining Inc. for...
On January 1, 2020, Franchisee Inc. enters into a contract with Italian Fine Dining Inc. for the right (beginning immediately) to operate an Italian Fine Dining restaurant and receive on-going consulting services for a five-year period. The upfront fee of $270,000 also includes specialized equipment for $36,000. The standalone selling price of the franchise services and specialized equipment are $234,000 and $36,000, respectively. The equipment (with a cost of $27,000) was transferred to the franchisee on March 1, 2020. Determine the amount of revenue to recognize for Italian Fine Dining Inc. on January 1, 2020, March 1, 2020, and December 31, 2020.
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On January 1, 2020, Franchisee Inc. enters into a contract with
Italian Fine Dining Inc. for...
On January 1, 2020, Franchisee Inc. enters into a contract with Italian Fine Dining Inc. for...
On January 1, 2020, Franchisee Inc. enters into a contract with Italian Fine Dining Inc. for the right (beginning immediately) to operate an Italian Fine Dining restaurant and receive on-going consulting services for a five-year period. The upfront fee of $180,000 also includes specialized equipment for $24,000. The standalone selling price of the franchise services and specialized equipment are $156,000 and $24,000, respectively. The equipment (with a cost of $18,000) was transferred to the franchisee on March 1, 2020. Determine...
3. Beefeater Inc. sells fast-food franchises. Beefeater receives $75,000 from a new franchisee for providing initial...
3. Beefeater Inc. sells fast-food franchises. Beefeater receives $75,000 from a new franchisee for providing initial training, equipment, and furnishings that together have a stand-alone selling price of $75,000. Beefeater also receives $36,000 per year for use of the Beefeater name and for ongoing consulting services (starting on the date the franchise is purchased). Seagram became a Beefeater franchisee on March 1, 2020, and on May 1, 2020 Seagram had completed training and was open for business. How much revenue...
On January 1, 20x1, an entity grants a franchisee the right to operate a restaurant in...
On January 1, 20x1, an entity grants a franchisee the right to operate a restaurant in a specific market using the entity’s brand name, concept and menu for a period of ten years. The entity has granted others similar rights to operate this restaurant concept in other markets. The entity commonly conducts national advertising campaigns, promoting the brand name, and restaurant concept generally. The franchisee will also purchase kitchen equipment from the entity. The entity will receive ₱950,000 upfront (₱50,000...
Trans Fat Express, Inc. entered an agreement with a franchisee on July 1, 2019. The agreement...
Trans Fat Express, Inc. entered an agreement with a franchisee on July 1, 2019. The agreement specified that Trans Fat Express receive an initial franchise fee of $400,000 (30% due at signing; the balance to be paid in equal annual installments plus interest at 8% of the unpaid balance beginning July 1, 2020). The $400,000 franchise fee is comprised of (1) consideration for the right to operate the franchise, and (2) payment for services to be performed by Trans Fat...
1. On January 1, 2020, Cao signed an agreement to operate as a franchisee of ATK...
1. On January 1, 2020, Cao signed an agreement to operate as a franchisee of ATK Ltd. for an initial franchise fee of $150,000. Of this amount, $30,000 was paid when the agreement was signed, and the balance is payable in 6 annual payments of$20,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020, of the 6 annual...
1. On January 1, 2020, Cao signed an agreement to operate as a franchisee of ATK...
1. On January 1, 2020, Cao signed an agreement to operate as a franchisee of ATK Ltd. for an initial franchise fee of $150,000. Of this amount, $30,000 was paid when the agreement was signed, and the balance is payable in 6 annual payments of$20,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020, of the 6 annual...
1. On January 1, 2020, Cao signed an agreement to operate as a franchisee of ATK...
1. On January 1, 2020, Cao signed an agreement to operate as a franchisee of ATK Ltd. for an initial franchise fee of $150,000. of this amount, $30,000 was paid when the agreement was signed, and the balance is payable in 6 annual payments of$20,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020, of the 6 annual...
On January 1, 2020, Lesley Benjamin signed an agreement, covering 5 years, to operate as a...
On January 1, 2020, Lesley Benjamin signed an agreement,
covering 5 years, to operate as a franchisee of Pronghorn Inc. for
an initial franchise fee of $46,000. The amount of $9,000 was paid
when the agreement was signed, and the balance is payable in five
annual payments of $7,400 each, beginning January 1, 2021. The
agreement provides that the down payment is nonrefundable and that
no future services are required of the franchisor once the
franchise commences operations on April...
Exercise 18-39 On January 1, 2020, Lesley Benjamin signed an agreement, covering 5 years, to operate...
Exercise 18-39
On January 1, 2020, Lesley Benjamin signed an agreement,
covering 5 years, to operate as a franchisee of Bonita Inc. for an
initial franchise fee of $51,000. The amount of $11,000 was paid
when the agreement was signed, and the balance is payable in five
annual payments of $8,000 each, beginning January 1, 2021. The
agreement provides that the down payment is nonrefundable and that
no future services are required of the franchisor once the
franchise commences operations...
D. Franchise: Pita Pal sells fast-food franchises. Pita Pal receives $75,000 from a new franchisee for...
D. Franchise: Pita Pal sells fast-food franchises. Pita Pal receives $75,000 from a new franchisee for providing initial training, equipment, and furnishings that together have a stand-alone selling price of $75,000. Pita Pal also receives $36,000 per year for use of the Pita Pal name and for ongoing consulting services (starting on the date the franchise is purchased). Rachel became a Pita Pal franchisee on March 1, 2018, and on May 1, 2018 Rachel had completed training and was open...
1. On January 1, 2020, Cao signed an agreement to operate as a franchisee of ATK Ltd. for an initial franchise fee of $150,000. of this amount, $30,000 was paid when the agreement was signed, and the balance is payable in 6 annual payments of$20,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020, of the 6 annual...
On January 1, 2020, Lesley Benjamin signed an agreement,
covering 5 years, to operate as a franchisee of Pronghorn Inc. for
an initial franchise fee of $46,000. The amount of $9,000 was paid
when the agreement was signed, and the balance is payable in five
annual payments of $7,400 each, beginning January 1, 2021. The
agreement provides that the down payment is nonrefundable and that
no future services are required of the franchisor once the
franchise commences operations on April...
Exercise 18-39
On January 1, 2020, Lesley Benjamin signed an agreement,
covering 5 years, to operate as a franchisee of Bonita Inc. for an
initial franchise fee of $51,000. The amount of $11,000 was paid
when the agreement was signed, and the balance is payable in five
annual payments of $8,000 each, beginning January 1, 2021. The
agreement provides that the down payment is nonrefundable and that
no future services are required of the franchisor once the
franchise commences operations...
D. Franchise: Pita Pal sells fast-food franchises. Pita Pal receives $75,000 from a new franchisee for providing initial training, equipment, and furnishings that together have a stand-alone selling price of $75,000. Pita Pal also receives $36,000 per year for use of the Pita Pal name and for ongoing consulting services (starting on the date the franchise is purchased). Rachel became a Pita Pal franchisee on March 1, 2018, and on May 1, 2018 Rachel had completed training and was open...
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