On Jan. 2, 2016, Gino Services Inc. signed an agreement authoring Triple 8 Company to operate as a franchisee over a 20-year period for an initial franchise fee of 50,000 received when the agreement was signed. Triple 8 commenced operations on July 1, 2016, at which date all of the initial services required of Gino had been performed. The agreement also provides that Triple 8 must pay annually to Gino a continuing franchise fee equal to 5% of their gross sales. Triple 8 reported gross sales of 400,000 for 2016. For the year ended Dec. 31, 2016, how much should Gino record as revenue from franchise fees with respect to the triple 8 franchise? a. P70,000 b. P50,000 c. P45,000 d. P22,500
On Jan. 2, 2016, Gino Services Inc. signed an agreement authoring Triple 8 Company to operate as a franchisee over a 20-year period for an initial franchise fee of 50,000 received when the agreement was signed. Triple 8 commenced operations on July 1, 2016, at which date all of the initial services required of Gino had been performed. The agreement also provides that Triple 8 must pay annually to Gino a continuing franchise fee equal to 5% of their gross sales. Triple 8 reported gross sales of 400,000 for 2016. For the year ended Dec. 31, 2016, how much should Gino record as revenue from franchise fees with respect to the triple 8 franchise? a. P70,000 b. P50,000 c. P45,000 d. P22,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On Jan. 2, 2016, Gino Services Inc. signed an agreement authoring Triple 8 Company to operate as a
franchisee over a 20-year period for an initial franchise fee of 50,000 received when the agreement was
signed. Triple 8 commenced operations on July 1, 2016, at which date all of the initial services required of
Gino had been performed. The agreement also provides that Triple 8 must pay annually to Gino a continuing
franchise fee equal to 5% of their gross sales. Triple 8 reported gross sales of 400,000 for 2016.
For the year ended Dec. 31, 2016, how much should Gino record as revenue from franchise fees with respect to the triple 8 franchise?
a. P70,000
b. P50,000
c. P45,000
c. P45,000
d. P22,500
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