Need answer On August 1, 2013, Mason Enterprises signed an agreement to operate as afranchisee of Speedy Foods, Inc., for an initial franchise fee of $275,000. Of thisamount, $95,000 was paid when the Agreement was signed, and the balance ispayable in four equal annual payments of $45,000 beginning August 1, 2014. Theagreement states that the down payment is non-refundable, and no future servicesare required from the franchisor. Mason's credit rating indicates that he can borrowmoney at 12% for a loan of this type.Information on present and future value factors is as follows:Present & Future Value FactorsPresent value of 1 at 12% for 4 periodsFuture value of 1 at 12% for 4 periodsValue0.641.57Present value of an ordinary annuity of 1 at 12% for 4 periods 3.10Mason should record the acquisition cost of the franchise on August 1, 2013 at:a. $184,600 b. $195,000 c. $234,500 d. $275,000

Explanation of Acquisition Cost of the Franchise:The acquisition cost of the franchise is the total…

Answered: On August 1, 2013, Mason Enterprises…

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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Mason should record the acquisition cost?
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