Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also referred to as Net sales revenue. Revenue recognition: GAAP (Generally accepted accounting principles) states that under specific conditions only the revenue is recognized and accounted for. Performance obligation: Performance obligation means a promise to transfer goods or services. A contract can have one or many obligations. Franchise: It is the right to sell a company’s product with the specified terms and condition in a particular area. Franchisee: It is an organization or a sole proprietor that holds a franchise for the sale of goods and services in operations. Franchisor: It is an organization or a sole proprietor that provides a franchise for the sale of goods and services in operations. Franchise fees: It is an amount which is paid by the franchisee to the franchisor for the life of franchise agreement. (a) To discuss: To discuss the alternatives to account for the franchise fees. Given information: All the related information is provided in the question document.

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Answer 1

Question

Chapter 18, Problem 12P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also referred to as Net sales revenue.

Revenue recognition: GAAP (Generally accepted accounting principles) states that under specific conditions only the revenue is recognized and accounted for.

Performance obligation: Performance obligation means a promise to transfer goods or services. A contract can have one or many obligations.

Franchise: It is the right to sell a company’s product with the specified terms and condition in a particular area.

Franchisee: It is an organization or a sole proprietor that holds a franchise for the sale of goods and services in operations.

Franchisor: It is an organization or a sole proprietor that provides a franchise for the sale of goods and services in operations.

Franchise fees: It is an amount which is paid by the franchisee to the franchisor for the life of franchise agreement.

(a)

To discuss: To discuss the alternatives to account for the franchise fees.

Given information: All the related information is provided in the question document.

To determine

(b)

To prepare: To prepare the journal entries for the initial and continuing franchise fees.

Given information: All the related information is provided in the question document.

To determine

(c)

To determine the accounting for unearned franchise fees, assuming that A has little or no involvement with the franchisee related to expert advice on employee and management training, quality control, and promotion, once the franchise opens.

Given information: All the related information is provided in the question document.

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Answer 2

Question

Chapter 18, Problem 12P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also referred to as Net sales revenue.

Revenue recognition: GAAP (Generally accepted accounting principles) states that under specific conditions only the revenue is recognized and accounted for.

Performance obligation: Performance obligation means a promise to transfer goods or services. A contract can have one or many obligations.

Franchise: It is the right to sell a company’s product with the specified terms and condition in a particular area.

Franchisee: It is an organization or a sole proprietor that holds a franchise for the sale of goods and services in operations.

Franchisor: It is an organization or a sole proprietor that provides a franchise for the sale of goods and services in operations.

Franchise fees: It is an amount which is paid by the franchisee to the franchisor for the life of franchise agreement.

(a)

To discuss: To discuss the alternatives to account for the franchise fees.

Given information: All the related information is provided in the question document.

To determine

(b)

To prepare: To prepare the journal entries for the initial and continuing franchise fees.

Given information: All the related information is provided in the question document.

To determine

(c)

To determine the accounting for unearned franchise fees, assuming that A has little or no involvement with the franchisee related to expert advice on employee and management training, quality control, and promotion, once the franchise opens.

Given information: All the related information is provided in the question document.

Expert Solution & Answer

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Answer 3

Question

Chapter 18, Problem 12P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also referred to as Net sales revenue.

Revenue recognition: GAAP (Generally accepted accounting principles) states that under specific conditions only the revenue is recognized and accounted for.

Performance obligation: Performance obligation means a promise to transfer goods or services. A contract can have one or many obligations.

Franchise: It is the right to sell a company’s product with the specified terms and condition in a particular area.

Franchisee: It is an organization or a sole proprietor that holds a franchise for the sale of goods and services in operations.

Franchisor: It is an organization or a sole proprietor that provides a franchise for the sale of goods and services in operations.

Franchise fees: It is an amount which is paid by the franchisee to the franchisor for the life of franchise agreement.

(a)

To discuss: To discuss the alternatives to account for the franchise fees.

Given information: All the related information is provided in the question document.

To determine

(b)

To prepare: To prepare the journal entries for the initial and continuing franchise fees.

Given information: All the related information is provided in the question document.

To determine

(c)

To determine the accounting for unearned franchise fees, assuming that A has little or no involvement with the franchisee related to expert advice on employee and management training, quality control, and promotion, once the franchise opens.

Given information: All the related information is provided in the question document.

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 18, Problem 12P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also referred to as Net sales revenue.

Revenue recognition: GAAP (Generally accepted accounting principles) states that under specific conditions only the revenue is recognized and accounted for.

Performance obligation: Performance obligation means a promise to transfer goods or services. A contract can have one or many obligations.

Franchise: It is the right to sell a company’s product with the specified terms and condition in a particular area.

Franchisee: It is an organization or a sole proprietor that holds a franchise for the sale of goods and services in operations.

Franchisor: It is an organization or a sole proprietor that provides a franchise for the sale of goods and services in operations.

Franchise fees: It is an amount which is paid by the franchisee to the franchisor for the life of franchise agreement.

(a)

To discuss: To discuss the alternatives to account for the franchise fees.

Given information: All the related information is provided in the question document.

To determine

(b)

To prepare: To prepare the journal entries for the initial and continuing franchise fees.

Given information: All the related information is provided in the question document.

To determine

(c)

To determine the accounting for unearned franchise fees, assuming that A has little or no involvement with the franchisee related to expert advice on employee and management training, quality control, and promotion, once the franchise opens.

Given information: All the related information is provided in the question document.

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Answer 5

Chapter 18, Problem 12P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also referred to as Net sales revenue.

Revenue recognition: GAAP (Generally accepted accounting principles) states that under specific conditions only the revenue is recognized and accounted for.

Performance obligation: Performance obligation means a promise to transfer goods or services. A contract can have one or many obligations.

Franchise: It is the right to sell a company’s product with the specified terms and condition in a particular area.

Franchisee: It is an organization or a sole proprietor that holds a franchise for the sale of goods and services in operations.

Franchisor: It is an organization or a sole proprietor that provides a franchise for the sale of goods and services in operations.

Franchise fees: It is an amount which is paid by the franchisee to the franchisor for the life of franchise agreement.

(a)

To discuss: To discuss the alternatives to account for the franchise fees.

Given information: All the related information is provided in the question document.

To determine

(b)

To prepare: To prepare the journal entries for the initial and continuing franchise fees.

Given information: All the related information is provided in the question document.

To determine

(c)

To determine the accounting for unearned franchise fees, assuming that A has little or no involvement with the franchisee related to expert advice on employee and management training, quality control, and promotion, once the franchise opens.

Given information: All the related information is provided in the question document.

Answer 6

Chapter 18, Problem 12P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also referred to as Net sales revenue.

Revenue recognition: GAAP (Generally accepted accounting principles) states that under specific conditions only the revenue is recognized and accounted for.

Performance obligation: Performance obligation means a promise to transfer goods or services. A contract can have one or many obligations.

Franchise: It is the right to sell a company’s product with the specified terms and condition in a particular area.

Franchisee: It is an organization or a sole proprietor that holds a franchise for the sale of goods and services in operations.

Franchisor: It is an organization or a sole proprietor that provides a franchise for the sale of goods and services in operations.

Franchise fees: It is an amount which is paid by the franchisee to the franchisor for the life of franchise agreement.

(a)

To discuss: To discuss the alternatives to account for the franchise fees.

Given information: All the related information is provided in the question document.

Answer 7

Chapter 18, Problem 12P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also referred to as Net sales revenue.

Revenue recognition: GAAP (Generally accepted accounting principles) states that under specific conditions only the revenue is recognized and accounted for.

Performance obligation: Performance obligation means a promise to transfer goods or services. A contract can have one or many obligations.

Franchise: It is the right to sell a company’s product with the specified terms and condition in a particular area.

Franchisee: It is an organization or a sole proprietor that holds a franchise for the sale of goods and services in operations.

Franchisor: It is an organization or a sole proprietor that provides a franchise for the sale of goods and services in operations.

Franchise fees: It is an amount which is paid by the franchisee to the franchisor for the life of franchise agreement.

(a)

To discuss: To discuss the alternatives to account for the franchise fees.

Given information: All the related information is provided in the question document.

Answer 8

To determine

(b)

To prepare: To prepare the journal entries for the initial and continuing franchise fees.

Given information: All the related information is provided in the question document.

Answer 9

To determine

(b)

To prepare: To prepare the journal entries for the initial and continuing franchise fees.

Given information: All the related information is provided in the question document.

Answer 10

To determine

(c)

To determine the accounting for unearned franchise fees, assuming that A has little or no involvement with the franchisee related to expert advice on employee and management training, quality control, and promotion, once the franchise opens.

Given information: All the related information is provided in the question document.

Answer 11

To determine

(c)

To determine the accounting for unearned franchise fees, assuming that A has little or no involvement with the franchisee related to expert advice on employee and management training, quality control, and promotion, once the franchise opens.

Given information: All the related information is provided in the question document.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 18 - Prob. 1Q Ch. 18 - Prob. 2Q Ch. 18 - Prob. 3Q Ch. 18 - Prob. 4Q Ch. 18 - Prob. 5Q Ch. 18 - Prob. 6Q Ch. 18 - Prob. 7Q Ch. 18 - Prob. 9Q Ch. 18 - Prob. 10Q Ch. 18 - Prob. 11Q

(b) To prepare: To prepare the journal entries for the initial and continuing franchise fees. Given information: All the related information is provided in the question document.

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Chapter 18 Solutions

(b)

To prepare: To prepare the journal entries for the initial and continuing franchise fees.

Given information: All the related information is provided in the question document.