Franchise arrangement and performance obligation In a franchise transaction, the franchisor has multiple performance obligations. In franchise business, the franchisor gives the selling rights to the franchisee for a particular period. The franchisor provides 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. The revenue recognition principle The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) is completed by the company. To discuss: The timing of revenue recognition of initial franchise fees revenue.

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Answer 1

Question

Chapter 5, Problem 5.23BYP

Requirement – 3 (a)

To determine

Franchise arrangement and performance obligation

In a franchise transaction, the franchisor has multiple performance obligations. In franchise business, the franchisor gives the selling rights to the franchisee for a particular period. The franchisor provides 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.

The revenue recognition principle

The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) is completed by the company.

To discuss: The timing of revenue recognition of initial franchise fees revenue.

b)

To determine

To discuss: The manner in which the continuing fees is determined.

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Answer 2

Question

Chapter 5, Problem 5.23BYP

Requirement – 3 (a)

To determine

Franchise arrangement and performance obligation

In a franchise transaction, the franchisor has multiple performance obligations. In franchise business, the franchisor gives the selling rights to the franchisee for a particular period. The franchisor provides 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.

The revenue recognition principle

The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) is completed by the company.

To discuss: The timing of revenue recognition of initial franchise fees revenue.

b)

To determine

To discuss: The manner in which the continuing fees is determined.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 5, Problem 5.23BYP

Requirement – 3 (a)

To determine

Franchise arrangement and performance obligation

In a franchise transaction, the franchisor has multiple performance obligations. In franchise business, the franchisor gives the selling rights to the franchisee for a particular period. The franchisor provides 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.

The revenue recognition principle

The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) is completed by the company.

To discuss: The timing of revenue recognition of initial franchise fees revenue.

b)

To determine

To discuss: The manner in which the continuing fees is determined.

Expert Solution & Answer

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Answer 4

Question

Chapter 5, Problem 5.23BYP

Requirement – 3 (a)

To determine

Franchise arrangement and performance obligation

In a franchise transaction, the franchisor has multiple performance obligations. In franchise business, the franchisor gives the selling rights to the franchisee for a particular period. The franchisor provides 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.

The revenue recognition principle

The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) is completed by the company.

To discuss: The timing of revenue recognition of initial franchise fees revenue.

b)

To determine

To discuss: The manner in which the continuing fees is determined.

Expert Solution & Answer

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Answer 5

Chapter 5, Problem 5.23BYP

Requirement – 3 (a)

To determine

Franchise arrangement and performance obligation

In a franchise transaction, the franchisor has multiple performance obligations. In franchise business, the franchisor gives the selling rights to the franchisee for a particular period. The franchisor provides 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.

The revenue recognition principle

The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) is completed by the company.

To discuss: The timing of revenue recognition of initial franchise fees revenue.

b)

To determine

To discuss: The manner in which the continuing fees is determined.

Answer 6

Chapter 5, Problem 5.23BYP

Requirement – 3 (a)

To determine

Franchise arrangement and performance obligation

In a franchise transaction, the franchisor has multiple performance obligations. In franchise business, the franchisor gives the selling rights to the franchisee for a particular period. The franchisor provides 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.

The revenue recognition principle

The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) is completed by the company.

To discuss: The timing of revenue recognition of initial franchise fees revenue.

Answer 7

Chapter 5, Problem 5.23BYP

Requirement – 3 (a)

To determine

Franchise arrangement and performance obligation

In a franchise transaction, the franchisor has multiple performance obligations. In franchise business, the franchisor gives the selling rights to the franchisee for a particular period. The franchisor provides 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.

The revenue recognition principle

The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) is completed by the company.

To discuss: The timing of revenue recognition of initial franchise fees revenue.

Answer 8

b)

To determine

To discuss: The manner in which the continuing fees is determined.

Answer 9

b)

To determine

To discuss: The manner in which the continuing fees is determined.

Answer 10

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Answer 11

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Answer 12

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Answer 13

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

Solution Summary: The author explains the franchisor's multiple performance obligations in a franchise transaction. The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation is completed.

To discuss: The manner in which the continuing fees is determined.

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Chapter 5 Solutions