On September 15, 2023, Carlos Mendez signed an agreement to operate as a franchisee of HealthyBites, Inc., for an initial franchise fee of $300,000. Per the agreement, Carlos made a non-refundable down payment of $100,000 when the contract was signed. The remaining balance is to be paid in five equal annual installments of $40,000 beginning September 15, 2024. The franchise agreement stipulates that the franchisor has no further service obligations after the initial setup. Based on his credit history, Carlos can obtain financing at an interest rate of 10% for similar arrangements. The following table provides relevant time value of money factors: Time Value Factor Present value of 1 Rate: 10% Periods: 5 0.621 Future value of 1 1.611 Present value of an ordinary annuity of 13.791 Future value of an ordinary annuity of 1 6.105

On September 15, 2023, Carlos Mendez signed an agreement to operate as a franchisee of HealthyBites, Inc., for an initial franchise fee of $300,000. Per the agreement, Carlos made a non-refundable down payment of $100,000 when the contract was signed. The remaining balance is to be paid in five equal annual installments of $40,000 beginning September 15, 2024. The franchise agreement stipulates that the franchisor has no further service obligations after the initial setup. Based on his credit history, Carlos can obtain financing at an interest rate of 10% for similar arrangements. The following table provides relevant time value of money factors: Time Value Factor Present value of 1 Rate: 10% Periods: 5 0.621 Future value of 1 1.611 Present value of an ordinary annuity of 13.791 Future value of an ordinary annuity of 1 6.105

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 January 1, 2022, Blight Stones obtained a franchise from Doug Corporation to sell for 20 years Doug’s product. The initial franchise fee as agreed upon shall be P6,000,000, and shall be payable in cash, P1,000,000, when the contract is signed and the balance in four equal installments thereafter, as evidenced by a noninterest bearing note. The agreement provides that the franchisor shall provide the necessary initial services required under a franchise contract. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor. Revenue from the franchise for 2022 was P5,000,000. The present value factor of P1 at 12% for 4 periods 0.6355 The present value factor of P1 ordinary annuity at 12% for 4 periods 3.0373 23) How much is the initial cost of the franchise? 24) How much is the total expenses for the year 2022?
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On July 1, 2012, ed wynne signed an agreement to operate as a franchise solve this question