.On January 1, 2021, Risa signed an agreement to operate as a franchisee of Teddy Company for an initial franchise fee of P12,000,000. The same date, Risa paid P4,000,000 and agreed to pay the balance in four equal annual payments of P2,000,000 beginning January 1, 2022. The down payment is not refundable, and no future services are required of the franchisor. Risa can borrow at 14% for a loan of this type. Present and future value factors are as follows: Present value of 1 at 14% for 4 periods Future amount of 1 at 14% for 4 periods Present value of an ordinary annuity of 1 at 14% for 4 periods 0.59 1.69 2.91 What is the acquisition cost of the franchise?
.On January 1, 2021, Risa signed an agreement to operate as a franchisee of Teddy Company for an initial franchise fee of P12,000,000. The same date, Risa paid P4,000,000 and agreed to pay the balance in four equal annual payments of P2,000,000 beginning January 1, 2022. The down payment is not refundable, and no future services are required of the franchisor. Risa can borrow at 14% for a loan of this type. Present and future value factors are as follows: Present value of 1 at 14% for 4 periods Future amount of 1 at 14% for 4 periods Present value of an ordinary annuity of 1 at 14% for 4 periods 0.59 1.69 2.91 What is the acquisition cost of the franchise?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 7C: On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial...
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