11 Fanny Company’s trademark was licensed to Jean Company for royalties of 40% of sales of the trademarked items. Royalties are payable semi-annually on March 15 for sales in July-December of the prior year, and on September 15 for sales in January-June of the same year. Fanny Company received the following royalties from Jean: 2021 – March 15, P62,000; September 15, P45,000; 2022– March 15, P70,000; September 15, P48,000. Estimated sales of trademarked items for July-December 2022 is P225,000 Under accrual method, royalty revenue for 2022

11 Fanny Company’s trademark was licensed to Jean Company for royalties of 40% of sales of the trademarked items. Royalties are payable semi-annually on March 15 for sales in July-December of the prior year, and on September 15 for sales in January-June of the same year. Fanny Company received the following royalties from Jean: 2021 – March 15, P62,000; September 15, P45,000; 2022– March 15, P70,000; September 15, P48,000. Estimated sales of trademarked items for July-December 2022 is P225,000 Under accrual method, royalty revenue for 2022

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 54P

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12. Fanny Company’s trademark was licensed to Jean Company for royalties of 40% of sales of the trademarked items. Royalties are payable semi-annually on March 15 for sales in July-December of the prior year, and on September 15 for sales in January-June of the same year. Fanny Company received the following royalties from Jean: 2021 – March 15, P62,000; September 15, P45,000; 2022– March 15, P70,000; September 15, P48,000. Estimated sales of trademarked items for July-December 2022 is P225,000 Under cash basis, royalty revenues for 2022 Group of answer choices 118,000 160,000 138,000 115,000
10. Fanny Company’s trademark was licensed to Jean Company for royalties of 40% of sales of the trademarked items. Royalties are payable semi-annually on March 15 for sales in July-December of the prior year, and on September 15 for sales in January-June of the same year. Fanny Company received the following royalties from Jean: 2021 – March 15, P62,000; September 15, P45,000; 2022– March 15, P70,000; September 15, P48,000. Estimated sales of trademarked items for July-December 2022 is P225,000 Under accrual method, royalty revenue for 2022 Group of answer choices 115,000 160,000 118,000 138,000
Screen Co. assigns some of its patents to other enterprises under a variety of licensing agreements . In some instances, advance royalties are received when the agreements are signed, and in others, royalties are remitted within sixty days after each license year-end. The following data are included in Screen Co.'s December 31 balance sheet : 2019 2020 Royalties receivable Unearned royalties 100,000 70,000 95,000 50,000 During 2020 Screen Co. received royalties' remittances of P200,000 . How much should Screen Co. report as royalty income in its income statement for the year ended December 31, 2020?
Ferol Company acquired rights to a patent from Rachal Company requiring an advance royalty payment when agreement was signed. Ferol Company remits royalties earned and due under the agreement on October 31 each year. Additionally, on the same date, Ferol Company pays in advance estimated royalties for the next year. Ferol Company adjusts prepaid royalties at year-end. Information for the year ended December 31, 2021 is as follows: 01/01/2021 Prepaid royalties 75,000 10/31/2021 Royalty payment (charged to royalty expense) 1,350,000 12/31/2021 Year-end credit adjustment to royalty expense 165,000 Under the cash basis of accounting, Ferol Company’s royalty expense for 2021 is Group of answer choices 1,185,000 1,255,000 1,350,000 1,260,000
WHAT IS THE AMOUNT SHOULD AAA CO. REPORT AS ROYALTY INCOME IN ITS INCOME STATEMENT FOR THE YEAR ENDED 12/31/20
On July 1, 20x1, W Co grants a franchisee the right to sell W Co’s products in a specific market over a period of 10 years. The franchise contract requires an upfront fee of P800,000 which includes P100,000 for equipment that W Co will provide for the franchisee. The amount reflects the stand-alone selling price of the equipment. In addition, the franchisee will pay a 10% sales-based royalty. W Co. has granted similar rights to other franchisees in other locations. W Co regularly undertakes activities that promote the brand name nationally. W delivers the equipment to the franchisee on July 15, 20x1. The franchisee starts selling the products on August 1, 20x1 and reports total sales of P600,000 for the year. How much total revenue is recognized from the contract in 20x1?
1. On July 1, 20x1, Wash Co. grants a franchisee the right to sell Wash Co.'s products in a specific market over a period of 10 years. The franchise contract requires an upfront fee of 800,000, which includes P100,000 for equipment that Wash Co. will provide to the franchisee. The amount reflects the stand-alone selling price of the equipment. In addition, the franchisee will pay a 10% sales-based royalty. Wash Co. has granted similar rights to other franchisees in other locations. Wash Co. regularly undertakes activities that promote the brand name nationally. Wash delivers the equipment to the franchisee on July 15, 20x1. The franchisee starts selling the products on August 1, 20x1 and reports total sales of 600,000 for the year. How much total revenue is recognized from the contract in 20x1 ? a. 860,000 c. 213,259 b. 760,000 d. 189,167
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On July 1, 20x1, Wash Co. grants a franchise the right to sell Wash Co.’s products in a specific market over a period of 10 years. The franchise contract requires an upfront fee of P800,000, which includes P100,000 for equipment that Wash Co. will provide to the franchisee. The amount reflects the stand-alone selling price of the equipment. In addition, the franchisee will pay a 10% sales-based royalty. Wash Co. has granted similar rights to other franchisees in other locations. Wash Co. regularly undertakes activities that promote the brand name nationally. Wash delivers the equipment to the franchisee on July 15, 20x1. The franchise starts selling the products on August 1, 20x1, and reports total sales of P600,000 for the year. How much total revenue is recognized from the contract in 20x1?
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On January 1, 20x1, Native Co. enters into a contract to grant a franchisee the right to use Native's trade name and sell Native's products for 10 years. In addition, Native also promises to provide the equipment necessary to operate the franchise store. The contract states a fixed consideration of P450,000 and a 5% sales-based royalty. The fixed consideration includes P150,000 payment for the equipment. This reflects the stand-alone selling price of the equipment. Native Co., as a franchisor, has developed customary business practice to undertake activities such as analyzing the customer's changing preferences and implementing product improvements, pricing strategies, marketing campaigns and operational efficiencies to support the franchise name. Native delivers the equipment to the customer on February 1, 20x1. The customer commences business operations on March 1, 20x1, at which date the 10-year license period starts to run. The franchisee reports sales of P1,200,000 for the year.…