Ping Inc. granted a franchise to Tito Inc. to operate its registered business of barbershop. The contract was signed on January 1, 2020 with initial franchise fee of P 500,000 payable in P 200,000 cash and the balance in five equal semi-annual installments every June 30 and December 31. The non-interest bearing promissory note (reasonably assured) has implicit rate of 10% (PVF = 4.32948). The contract provides that Tito Inc. shall pay a contingent franchise fee equal to 5% of the revenue from the barbershop. Tito Inc. reported a revenue in the amount of P 100,000 during the 2020. Ping Inc. has substantially performed all the services required under the franchise contract.
Ping Inc. granted a franchise to Tito Inc. to operate its registered business of barbershop. The contract was signed on January 1, 2020 with initial franchise fee of P 500,000 payable in P 200,000 cash and the balance in five equal semi-annual installments every June 30 and December 31. The non-interest bearing promissory note (reasonably assured) has implicit rate of 10% (PVF = 4.32948). The contract provides that Tito Inc. shall pay a contingent franchise fee equal to 5% of the revenue from the barbershop. Tito Inc. reported a revenue in the amount of P 100,000 during the 2020. Ping Inc. has substantially performed all the services required under the franchise contract.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Ping Inc. granted a franchise to Tito Inc. to
operate its registered business of
barbershop. The contract was signed on
January 1, 2020 with initial franchise fee of P
500,000 payable in P 200,000 cash and the
balance in five equal semi-annual
installments every June 30 and December
31. The non-interest bearing promissory note
(reasonably assured) has implicit rate of 10%
(PVF = 4.32948). The contract provides that
Tito Inc. shall pay a contingent franchise fee
equal to 5% of the revenue from the
barbershop. Tito Inc. reported a revenue in
the amount of P 100,000 during the 2020.
Ping Inc. has substantially performed all the
services required under the franchise
contract.
What is the total income to be recognized by
Ping Inc. for the year ended December 31,
2020 ?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7be8b601-909d-4c0e-8a62-680ed118e533%2F69be2dc9-5691-4009-ba9b-932eec588cf7%2F39fesio_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Ping Inc. granted a franchise to Tito Inc. to
operate its registered business of
barbershop. The contract was signed on
January 1, 2020 with initial franchise fee of P
500,000 payable in P 200,000 cash and the
balance in five equal semi-annual
installments every June 30 and December
31. The non-interest bearing promissory note
(reasonably assured) has implicit rate of 10%
(PVF = 4.32948). The contract provides that
Tito Inc. shall pay a contingent franchise fee
equal to 5% of the revenue from the
barbershop. Tito Inc. reported a revenue in
the amount of P 100,000 during the 2020.
Ping Inc. has substantially performed all the
services required under the franchise
contract.
What is the total income to be recognized by
Ping Inc. for the year ended December 31,
2020 ?
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