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1. PFRS does not address the accounting for revenue from franchise agreements 2. Under the current PFRSS, a franchisor recognizes the initial franchise fee as revenue in full at the commenceme business operations.

1. PFRS does not address the accounting for revenue from franchise agreements 2. Under the current PFRSS, a franchisor recognizes the initial franchise fee as revenue in full at the commenceme business operations.

FINANCIAL ACCOUNTING
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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TRUE OR FALSE. explaination is not necessary

A - TRUE B - FALSE 1. PFRS does not address the accounting for revenue from franchise agreements 2. Under the current PFRSS, a franchisor recognizes the initial franchise fee as revenue in full at the commencement of the franchisee's business operations. 3. If a promise to grant a license is not distinct, the entity shall apply the specific principles to determine whether the license provides the customer a right to access or a right to use the enitity's intellectual property. 4. If the intellectual property to which the customer has rights does not change over the license period, the nature of the entity's promise to transfer the license I most likely a " right to access". 5. According to PFRS 15, if at contract inception, the entity determines that the collectability of the consideration in a franchise agreement is significantly uncertain, the entity may recognize revenue from the contract using either the installment sales method or the cost recovery method. 6. Joint Control distinguishes an interest in join arrangement from other types of investment. 7. A Joint arrangement exists only if decisions on relevant activities require the unanimous consent of all the participants to the arrangement. 8. Joint control exists when no single party is in a position to control the activity unilaterally. 9. "Step 2" of the revenue recognition under PFRS 15 is allocation of the transaction price to the performance obligations in the contract. 10. Revenue from a performance obligation that is satisfied over time is recognized as the entity progresses towards the complete satisfaction of the performance obligations.
Transcribed Image Text:A - TRUE B - FALSE 1. PFRS does not address the accounting for revenue from franchise agreements 2. Under the current PFRSS, a franchisor recognizes the initial franchise fee as revenue in full at the commencement of the franchisee's business operations. 3. If a promise to grant a license is not distinct, the entity shall apply the specific principles to determine whether the license provides the customer a right to access or a right to use the enitity's intellectual property. 4. If the intellectual property to which the customer has rights does not change over the license period, the nature of the entity's promise to transfer the license I most likely a " right to access". 5. According to PFRS 15, if at contract inception, the entity determines that the collectability of the consideration in a franchise agreement is significantly uncertain, the entity may recognize revenue from the contract using either the installment sales method or the cost recovery method. 6. Joint Control distinguishes an interest in join arrangement from other types of investment. 7. A Joint arrangement exists only if decisions on relevant activities require the unanimous consent of all the participants to the arrangement. 8. Joint control exists when no single party is in a position to control the activity unilaterally. 9. "Step 2" of the revenue recognition under PFRS 15 is allocation of the transaction price to the performance obligations in the contract. 10. Revenue from a performance obligation that is satisfied over time is recognized as the entity progresses towards the complete satisfaction of the performance obligations.
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