On July 1, 2019, Hart signed an agreement to operate as a franchisee of Ace Printers for an initial franchise fee of P12,000,000. The same date, Hart paid P4,000,000 and agreed to pay the balance in four equal annual payments of P2,000,000 beginning July 1,2019. The down payment is not refundable and no future services are required of the franchisor. Hart can borrow at 14% for a loan of this type. Present and future value factors are as follows: Present value of 1 at 14% for 4 periods Future amount of 1 at 14% for 4 periods Present value of an ordinary annuity of 1 at 14% for 4 periods Hart should record the acquisition cost of the franchise on July 1,2019 at
On July 1, 2019, Hart signed an agreement to operate as a franchisee of Ace Printers for an initial franchise fee of P12,000,000. The same date, Hart paid P4,000,000 and agreed to pay the balance in four equal annual payments of P2,000,000 beginning July 1,2019. The down payment is not refundable and no future services are required of the franchisor. Hart can borrow at 14% for a loan of this type. Present and future value factors are as follows: Present value of 1 at 14% for 4 periods Future amount of 1 at 14% for 4 periods Present value of an ordinary annuity of 1 at 14% for 4 periods Hart should record the acquisition cost of the franchise on July 1,2019 at
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 1, 2019, Hart signed an agreement to operate as a franchisee of Ace Printers for an initial franchise fee of P12,000,000. The same date, Hart paid P4,000,000 and agreed to pay the balance in four equal annual payments of P2,000,000 beginning July 1,2019. The down payment is not refundable and no future services are required of
the franchisor. Hart can borrow at 14% for a loan of this type.
the franchisor. Hart can borrow at 14% for a loan of this type.
Present and future value factors are as follows:
Present value of 1 at 14% for 4 periods
Future amount of 1 at 14% for 4 periods
Present value of an ordinary annuity of 1 at 14% for 4 periods
Present value of 1 at 14% for 4 periods
Future amount of 1 at 14% for 4 periods
Present value of an ordinary annuity of 1 at 14% for 4 periods
Hart should record the acquisition cost of the franchise on July 1,2019 at
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