On January 1, 2025, Nancy White signed an agreement, covering 5 years, to operate as a franchisep of Blossom Inc. for an initial franchise fee of $41,000. The amount of $12,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $5,800 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Nancy White's credit rating indicates that she can borrow money at 9% for a loan of this type

On January 1, 2025, Nancy White signed an agreement, covering 5 years, to operate as a franchisep of Blossom Inc. for an initial franchise fee of $41,000. The amount of $12,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $5,800 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Nancy White's credit rating indicates that she can borrow money at 9% for a loan of this type

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 7C: On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial...

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On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.
On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020.
On January 1, 2025, Nancy White signed an agreement, covering 5 years, to operate as a franchisee of Blossom Inc. for an initial franchise fee of $41,000. The amount of $12,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $5,800 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Nancy White's credit rating indicates that she can borrow money at 9% for a loan of this type. Click here to view the factor table. (a) Your answer is partially correct. -- 4 Prepare journal entries for Blossom for 2025-related revenue for this franchise arrangement. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
On January 1, 2025, Mary Johnson signed an agreement, covering 5 years, to operate as a franchisee of Blossom Inc. for an initial franchise fee of $50,000. The amount of $9,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $8,200 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Mary Johnson's credit rating indicates that she can borrow money at 8% for a loan of this type. Click here to view the factor table. (a) Your answer is correct. Prepare journal entries for Blossom for 2025-related revenue for this franchise arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal…
On January 1, 2025, Barbara Brown signed an agreement, covering 5 years, to operate as a franchisee of Ivanhoe Inc. for an initial franchise fee of $51,000. The amount of $11,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $8,000 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Barbara Brown's credit rating indicates that she can borrow money at 7% for a loan of this type. Click here to view the factor table. Prepare journal entries for Ivanhoe for 2025-related revenue for this franchise arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the…
On January 1, 2025, Barbara Brown signed an agreement, covering 5 years, to operate as a franchisee of Ivanhoe Inc. for an initial franchise fee of $51,000. The amount of $11,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $8,000 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Barbara Brown's credit rating indicates that she can borrow money at 7% for a loan of this type. Click here to view the factor table. Prepare journal entries for Ivanhoe for 2025-related revenue for this franchise arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the…
On January 1, 2025, Maria Wilson signed an agreement, covering 5 years, to operate as a franchisee of Sheridan Inc. for an initial franchise fee of $40,000. The amount of $13,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $5,400 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Maria Wilson's credit rating indicates that she can borrow money at 8% for a loan of this type. Click here to view the factor table. (a) Prepare journal entries for Sheridan for 2025-related revenue for this franchise arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and…
On January 1, 2025, Debra Smith signed an agreement, covering 5 years, to operate as a franchisee of Cullumber Inc. for an initial franchise fee of $36,000. The amount of $9,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $5,400 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Debra Smith's credit rating indicates that she can borrow money at 9% for a loan of this type. Click here to view the factor table. (a) Prepare journal entries for Cullumber for 2025-related revenue for this franchise arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the…
On January 1, 2020, Lesley Benjamin signed an agreement, covering 5 years, to operate as a franchisee of Campbell Inc. for an initial franchise fee of $50,000. The amount of $10,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $8,000 each, beginning January 1, 2021. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2020. Lesley Benjamin's credit rating indicates that she can borrow money at 11% for a loan of this type. Instructions a. Prepare journal entries for Campbell for 2020-related revenue for this franchise arrangement. b. Prepare journal entries for Campbell for 2020-related revenue for this franchise arrangement, assuming that in addition to the franchise rights, Campbell also provides 1 year of operational consulting and training services, beginning on the signing date. These services have a value of…
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(Franchise Fee, Initial Down Payment) On January 1, 2017, Lesley Benjamin signed an agreement, covering 5 years, to operate as a franchisee of Campbell Inc. for an initial franchise fee of $50,000. The amount of $10,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $8,000 each, beginning January 1, 2018. Theagreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2017. Lesley Benjamin’s credit rating indicates that she can borrow money at 11% for a loan of this type.Instructions(a) Prepare journal entries for Campbell for 2017-related revenue for this franchise arrangement.(b) Prepare journal entries for Campbell for 2017-related revenue for this franchise arrangement, assuming that in addition to the franchise rights, Campbell also provides 1 year of operational consulting and training services, beginning on the signing date.…
Diamond's Pizza Inc. enters into a franchise agreement on December 31, 2019, giving Domino Corp. the right to operate as a franchisee of Diamond's Pizza for 5 years. Diamond charges Domino an initial franchisee fee of P475,000 for the right to operate as a franchisee. Of this amount, P190,000 is payable when Domino Corp. signs the agreement, and the balance is payable in five annual payments of P57,000 each on December 31. Consider the following for allocation of the transaction price at December 2019. Rights to the trade name, market area, technical and propriety know-how Services – training, etc Machinery and equipment etc. (costing, P95, 000) Total Transaction price P190,000.00 94,591.50 133,000.00 P417,591.50 The credit rating of Domino indicates that money can be borrowed at 8%. The present value of an ordinary annuity of five annual receipts of P57,000 each discounted at 8% is P227, 591.50. The discount of P57,408.50 represents the interest revenue to be accrued by Diamond's…