Cho Nam Restaurant sold a fast-food restaurant franchise to Moon Corporation. The sale agreement signed on January 2, 2023, called for a P60,000 down payment plus two P20,000 annual payments representing the value of initial franchise services rendered by Cho Nam. The present value of two annual payments appropriately discounted at 10% is P34,710. In addition, the agreement required the franchisee to pay 5% of its gross revenues to the franchisor; this was deemed sufficient to cover the cost and provide a reasonable profit margin on continuing franchise services to be performed by Cho Nam. The restaurant opened early in 2023, and its sales for the year amounted to P500,000. Cho Nam Restaurant's 2023 total revenue from the Moon franchise will be:
6.)
Cho Nam Restaurant sold a fast-food restaurant franchise to Moon Corporation. The sale agreement signed on January 2, 2023, called for a P60,000 down payment plus two P20,000 annual payments representing the value of initial franchise services rendered by Cho Nam. The present value of two annual payments appropriately discounted at 10% is P34,710. In addition, the agreement required the franchisee to pay 5% of its gross revenues to the franchisor; this was deemed sufficient to cover the cost and provide a reasonable profit margin on continuing franchise services to be performed by Cho Nam. The restaurant opened early in 2023, and its sales for the year amounted to P500,000.
Cho Nam Restaurant's 2023 total revenue from the Moon franchise will be:
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