.On April 1,2021, Beauty Company purchased a franchise for P3,000,000. In addition, the franchise contract stipulates that Beauty shall pay to the franchisor, 5% of its sales exceeding P6,000,000, payable at the end of the month following the end of every quarter. For the nine months ended Dec. 31, 2021, Beauty's s sales amounts to P8,500,000. The estimated useful life of the franchise is 10 years. It is the company's policy to amortize to the nearest month. What is the carrying value of the franchise at December 31, 2022?

.On April 1,2021, Beauty Company purchased a franchise for P3,000,000. In addition, the franchise contract stipulates that Beauty shall pay to the franchisor, 5% of its sales exceeding P6,000,000, payable at the end of the month following the end of every quarter. For the nine months ended Dec. 31, 2021, Beauty's s sales amounts to P8,500,000. The estimated useful life of the franchise is 10 years. It is the company's policy to amortize to the nearest month. What is the carrying value of the franchise at December 31, 2022?

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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Concept explainers

Market Efficiency

Market efficiency refers to the market's ability to provide investors with all available information about investment options for buying and selling securities. Market efficiency reflects the true value of securities without undervaluing or overvaluing them. When the quality and quantity of information increase, the market becomes more efficient, allowing it to reduce arbitrage and obtain higher market returns from investment. In a well-functioning market, everyone receives all information completely and immediately at no cost. It opens up a plethora of opportunities for investors to access various investment options.

Question

100%

.On April 1,2021, Beauty Company purchased a franchise for P3,000,000. In addition, the
franchise contract stipulates that Beauty shall pay to the franchisor, 5% of its sales exceeding
P6,000,000, payable at the end of the month following the end of every quarter. For the nine
months ended Dec. 31, 2021, Beauty's s sales amounts to P8,500,000. The estimated useful life of
the franchise is 10 years. It is the company's policy to amortize to the nearest month.
What is the carrying value of the franchise at December 31, 2022?

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