The license provides Customer X rights over Entity A's patented processes. Customer X continues to operate using its trade name and has the discretion of developing a new product name for the products it will produce using the patented processes. The license does not explicitly require Entity A to undertake activities that will significantly affect the intellectual property to which Customer X has rights Neither does Custo mer X

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The choices are 80,747 21,187 20,000 and 0

The license provides Customer X
rights over Entity A's patented
processes. Customer X continues
to operate using its trade name and
has the discretion of developing a
new product name for the products
it will produce using the patented
processes. The license does not
explicitly require Entity A to
undertake activities that will
significantly affect the intellectual
property to which Customer X has
rights. Neither does Customer X
expect that Entity A will undertake
such activities. Entity A grants the
license to Customer X on
December 31, 20x1. How much
revenue from the franchise
contract will Entity A recognize in
20x1?
On December 31, 20x1, Entity A enters into a contract with Customer X to transfer a license for a fixed
fee of P100,000 payable as follows:
20% payable upon signing of contract.
80% due in four equal annual installments starting December 31, 20x2. The appropriate discount
rate is 12%.
•
80,747
21,187
20,000
Transcribed Image Text:The license provides Customer X rights over Entity A's patented processes. Customer X continues to operate using its trade name and has the discretion of developing a new product name for the products it will produce using the patented processes. The license does not explicitly require Entity A to undertake activities that will significantly affect the intellectual property to which Customer X has rights. Neither does Customer X expect that Entity A will undertake such activities. Entity A grants the license to Customer X on December 31, 20x1. How much revenue from the franchise contract will Entity A recognize in 20x1? On December 31, 20x1, Entity A enters into a contract with Customer X to transfer a license for a fixed fee of P100,000 payable as follows: 20% payable upon signing of contract. 80% due in four equal annual installments starting December 31, 20x2. The appropriate discount rate is 12%. • 80,747 21,187 20,000
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