Franchise arrangement and performance obligation: The franchisor has multiple performance obligations in the franchise transaction. The franchisor gives the selling rights to the franchisee in particular period in franchise business. The franchisor should provide the start-up services to the franchisee. Therefore, the franchise involves a license to use the franchisor property, and sales of the goods and service in the name of franchisor. Residual approach: In this approach, the seller estimates stand-alone selling price based on the total transaction price. The stand-alone selling price depends upon the performance obligations. To calculate: The amount of the stand-alone selling price of the five-year right to operate as a Monitor Muffler retail establishment.

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Answer 1

Question

Chapter 5, Problem 5.15E

Requirement – 1

To determine

Franchise arrangement and performance obligation:

The franchisor has multiple performance obligations in the franchise transaction. The franchisor gives the selling rights to the franchisee in particular period in franchise business. The franchisor should provide the start-up services to the franchisee.

Therefore, the franchise involves a license to use the franchisor property, and sales of the goods and service in the name of franchisor.

Residual approach:

In this approach, the seller estimates stand-alone selling price based on the total transaction price. The stand-alone selling price depends upon the performance obligations.

To calculate: The amount of the stand-alone selling price of the five-year right to operate as a Monitor Muffler retail establishment.

Requirement – 2

To determine

To prepare: The journal entry to the sale of a franchise on July 1, 2016.

Requirement – 3

To determine

The amount of revenue would monitor recognize in the year ended December 31, 2016.

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Answer 2

Question

Chapter 5, Problem 5.15E

Requirement – 1

To determine

Franchise arrangement and performance obligation:

The franchisor has multiple performance obligations in the franchise transaction. The franchisor gives the selling rights to the franchisee in particular period in franchise business. The franchisor should provide the start-up services to the franchisee.

Therefore, the franchise involves a license to use the franchisor property, and sales of the goods and service in the name of franchisor.

Residual approach:

In this approach, the seller estimates stand-alone selling price based on the total transaction price. The stand-alone selling price depends upon the performance obligations.

To calculate: The amount of the stand-alone selling price of the five-year right to operate as a Monitor Muffler retail establishment.

Requirement – 2

To determine

To prepare: The journal entry to the sale of a franchise on July 1, 2016.

Requirement – 3

To determine

The amount of revenue would monitor recognize in the year ended December 31, 2016.

Expert Solution & Answer

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Answer 3

Question

Chapter 5, Problem 5.15E

Requirement – 1

To determine

Franchise arrangement and performance obligation:

The franchisor has multiple performance obligations in the franchise transaction. The franchisor gives the selling rights to the franchisee in particular period in franchise business. The franchisor should provide the start-up services to the franchisee.

Therefore, the franchise involves a license to use the franchisor property, and sales of the goods and service in the name of franchisor.

Residual approach:

In this approach, the seller estimates stand-alone selling price based on the total transaction price. The stand-alone selling price depends upon the performance obligations.

To calculate: The amount of the stand-alone selling price of the five-year right to operate as a Monitor Muffler retail establishment.

Requirement – 2

To determine

To prepare: The journal entry to the sale of a franchise on July 1, 2016.

Requirement – 3

To determine

The amount of revenue would monitor recognize in the year ended December 31, 2016.

Expert Solution & Answer

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Answer 4

Question

Chapter 5, Problem 5.15E

Requirement – 1

To determine

Franchise arrangement and performance obligation:

The franchisor has multiple performance obligations in the franchise transaction. The franchisor gives the selling rights to the franchisee in particular period in franchise business. The franchisor should provide the start-up services to the franchisee.

Therefore, the franchise involves a license to use the franchisor property, and sales of the goods and service in the name of franchisor.

Residual approach:

In this approach, the seller estimates stand-alone selling price based on the total transaction price. The stand-alone selling price depends upon the performance obligations.

To calculate: The amount of the stand-alone selling price of the five-year right to operate as a Monitor Muffler retail establishment.

Requirement – 2

To determine

To prepare: The journal entry to the sale of a franchise on July 1, 2016.

Requirement – 3

To determine

The amount of revenue would monitor recognize in the year ended December 31, 2016.

Expert Solution & Answer

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Answer 5

Chapter 5, Problem 5.15E

Requirement – 1

To determine

Franchise arrangement and performance obligation:

The franchisor has multiple performance obligations in the franchise transaction. The franchisor gives the selling rights to the franchisee in particular period in franchise business. The franchisor should provide the start-up services to the franchisee.

Therefore, the franchise involves a license to use the franchisor property, and sales of the goods and service in the name of franchisor.

Residual approach:

In this approach, the seller estimates stand-alone selling price based on the total transaction price. The stand-alone selling price depends upon the performance obligations.

To calculate: The amount of the stand-alone selling price of the five-year right to operate as a Monitor Muffler retail establishment.

Requirement – 2

To determine

To prepare: The journal entry to the sale of a franchise on July 1, 2016.

Requirement – 3

To determine

The amount of revenue would monitor recognize in the year ended December 31, 2016.

Answer 6

Chapter 5, Problem 5.15E

Requirement – 1

To determine

Franchise arrangement and performance obligation:

The franchisor has multiple performance obligations in the franchise transaction. The franchisor gives the selling rights to the franchisee in particular period in franchise business. The franchisor should provide the start-up services to the franchisee.

Therefore, the franchise involves a license to use the franchisor property, and sales of the goods and service in the name of franchisor.

Residual approach:

In this approach, the seller estimates stand-alone selling price based on the total transaction price. The stand-alone selling price depends upon the performance obligations.

To calculate: The amount of the stand-alone selling price of the five-year right to operate as a Monitor Muffler retail establishment.

Answer 7

Chapter 5, Problem 5.15E

Requirement – 1

To determine

Franchise arrangement and performance obligation:

The franchisor has multiple performance obligations in the franchise transaction. The franchisor gives the selling rights to the franchisee in particular period in franchise business. The franchisor should provide the start-up services to the franchisee.

Therefore, the franchise involves a license to use the franchisor property, and sales of the goods and service in the name of franchisor.

Residual approach:

In this approach, the seller estimates stand-alone selling price based on the total transaction price. The stand-alone selling price depends upon the performance obligations.

To calculate: The amount of the stand-alone selling price of the five-year right to operate as a Monitor Muffler retail establishment.

Answer 8

Requirement – 2

To determine

To prepare: The journal entry to the sale of a franchise on July 1, 2016.

Answer 9

Requirement – 2

To determine

To prepare: The journal entry to the sale of a franchise on July 1, 2016.

Answer 10

Requirement – 3

To determine

The amount of revenue would monitor recognize in the year ended December 31, 2016.

Answer 11

Requirement – 3

To determine

The amount of revenue would monitor recognize in the year ended December 31, 2016.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 5 - What are the five key steps a company follows to...Ch. 5 - What indicators suggest that a performance...Ch. 5 - What criteria determine whether a company can...Ch. 5 - We recognize service revenue either at one point...Ch. 5 - What characteristics make a good or service a...Ch. 5 - Prob. 5.6Q Ch. 5 - What must a contract include for the contract to...Ch. 5 - When a contract includes an option to buy...Ch. 5 - Prob. 5.9Q Ch. 5 - Prob. 5.10Q

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To prepare: The journal entry to the sale of a franchise on July 1, 2016.

The amount of revenue would monitor recognize in the year ended December 31, 2016.

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