WHAT IS THE TOTAL REVENUE TO BE RECOGNIZED BY ENTITY A FOR THE PERIOD ENDED DEC;EMBER 31, 2021 On January 1, 2021, Entity A granted a franchise to Entity B involving a food stall. The franchiseagreement requires Entity B to pay nonrefundable initial franchise fee amounting to P1,000,000 withinten days from the signing of document evidencing the franchise agreement. Moreover, the franchiseagreement requires Entity B to pay contingent franchise fee equivalent to 10% of its sales revenue toEntity A. Entity B paid the initial franchise fee on January 10, 2021.In relation to initial franchise fee, Entity A is required to render the following separate and distinctperformance obligations:a. To construct the food stall of Entity B which has stand-alone selling price of P500,000.b. To allow Entity B to use its registered trademark and tradename for a period of 20 years startingJanuary 1, 2021 which has stand-alone selling price of P200,000.To supply 5,000 units of raw materials to Entity B which has stand-alone selling price of P300,000.C.On June 30, 2021, Entity A completed the construction of Entity B's food stall. As of December 31, 2021,Entity has already delivered 2,000 units of raw materials to Entity B. Entity B commenced its operationson October 1, 2021 and it reported sales revenue amounting to P330,000 for the period ended December31, 2021 What is the total revenue to be recognized by Entity A for the period ended December 31,2021?

Revenue refers to the increase in the income or increase in the net assets occured from its normal…

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Business

Accounting

WHAT IS THE TOTAL REVENUE TO BE RECOGNIZED BY ENTITY A FOR THE PERIOD ENDED DEC;EMBER 31, 2021

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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