ABC Company sells franchise arrangements throughout Luzon and Visayas. Under a franchise agreement, ABC receives P600,000 in exchange for satisfying the following separate performance obligations: . Franchisees have a five-year right to operate as an ABC's retail establishment in an exclusive sales territory • Franchisees receive initial training and certification, and Franchisees receive an ABC building and necessary equipment. The stand-alone selling price of the initial training and certification is P15,000, and P450,000 for the building and equipment. ABC estimates the stand-alone selling price of the five-year right to operate as an ABC establishment using the residual approach. ABC received P75,000 on July 1, 2022, from a customer and accepted a note receivable for the rest of the franchise price. ABC will construct and equip the customer's building and train and certify the customer by September 1, and the customer's five-year right to operate as an ABC establishment will commence on September 1 as well. How much is the revenue to be recognized by ABC from franchise fees in 2022? O 9,000 O 450,000 O 465,000 O 474,000
ABC Company sells franchise arrangements throughout Luzon and Visayas. Under a franchise agreement, ABC receives P600,000 in exchange for satisfying the following separate performance obligations: . Franchisees have a five-year right to operate as an ABC's retail establishment in an exclusive sales territory • Franchisees receive initial training and certification, and Franchisees receive an ABC building and necessary equipment. The stand-alone selling price of the initial training and certification is P15,000, and P450,000 for the building and equipment. ABC estimates the stand-alone selling price of the five-year right to operate as an ABC establishment using the residual approach. ABC received P75,000 on July 1, 2022, from a customer and accepted a note receivable for the rest of the franchise price. ABC will construct and equip the customer's building and train and certify the customer by September 1, and the customer's five-year right to operate as an ABC establishment will commence on September 1 as well. How much is the revenue to be recognized by ABC from franchise fees in 2022? O 9,000 O 450,000 O 465,000 O 474,000
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 63P
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Transcribed Image Text:ABC Company sells franchise arrangements throughout Luzon and Visayas. Under a franchise agreement, ABC receives P600,000 in exchange for satisfying the
following separate performance obligations:
Franchisees have a five-year right to operate as an ABC's retail establishment in an exclusive sales territory
Franchisees receive initial training and certification, and
. Franchisees receive an ABC building and necessary equipment.
●
The stand-alone selling price of the initial training and certification is P15,000, and P450,000 for the building and equipment. ABC estimates the stand-alone selling
price of the five-year right to operate as an ABC establishment using the residual approach. ABC received P75,000 on July 1, 2022, from a customer and accepted a
note receivable for the rest of the franchise price. ABC will construct and equip the customer's building and train and certify the customer by September 1, and the
customer's five-year right to operate as an ABC establishment will commence on September 1 as well.
How much is the revenue to be recognized by ABC from franchise fees in 2022?
9,000
450,000
465,000
O 474,000
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