fi ue Recognition ~ Contract with Customers: Franchise and Consignment Ree 343 rate a CHOICE PROBLEMS/THEORIES aU NU 1-89 (FRANCHISE) 1. 21. 1d b a 3la 41. b Sl. b ad 12d Dac 32. b 42.b 52. d 3c¢.)613.a 23. b 33. b 43. d 4d 14d 24. b 34. 0 44. ¢ 5. d 15. a 2. a Ome 45. d 6b 16 b 26. ¢ 36. a 46. a 7c 7d 27. a 37. b 47. b 8a 18c 28. c 38. d 48. b 9d 9% 29. a 3. 49. a 10. b 20. d 30. b 40. b 50. b The exclusive five-year right to operate the only TechStop in a particular area is distinct because it can be used with other goods or services (furnishings, equipment, products) that the customer could obtain elsewhere The equipment is distinct because similar equipment is sold separately. The training is distinct because similar training could be acquired elsewhere. AntonTech would allocate the initial franchise fee to three separate performance obligations based on their relative stond-olone prices: (1) the right to operate a Techstop, (2) equipment, and (3) training. d- AntonTech would recognize revenue for the right to operate a TechStop over the five- Year license period, because AntonTech’s ongoing activities over the license period affect the value of the right to run a TechStop. ¢- AntonTech would recognize revenue for the equipment at the time the equipment is delivered to the franchisee, d ~ recognize revenue for the training over the two-year period that the training is Provided. = In that case, AntonTech would recognize revenue associated with that fee over time Ein provides the ongoing services. b-There are three performance obligations in the contrac! for franchise: Righis to the trade name, market area, and proprietory know-how for 5 years are Not individually distinct. Each one is not sold separately and cannot be used with other goods or services that are readily available to the franchisee. Combined rights give tise to a single performance obligation, Training services, and Equipment 2 3. It should be noted that training (similar) services and equipment ate distinct and can be Sold separately, Scanned with CamScanneree +s eonno! recognite /BYENS Toto! amount of franchise agreement P ex0000 less slang clone seling pace of roning (13000) {Gss Sondslone seling pice of buiding and equp. _[4S0.000, Stand-alone seing price of five-year ght 2 135.000, 16. b- Aso! July 1, 2036, Joey Monitor has no fuliled ony ofits performance obigatons she entre F600000 franchise fee i recorded 0s deleted revenve, COW ncn cmmnnmrsnen ED Notes teccvabie ee Deferred revenue 2 ~ On september loey Monitor has satisied is performance Teipect to sting ona contying Pens ona deleting eaunped zoey Mont DudnG, Therefore, Joey Monitor shovie recognize revenve of P15,000 + F480.000 PASSO Se date, in eddition, by December 31, 20x, Joey Monitor has eomed 4 MONTE T SOioay, (Seplember — December) ewsocioted wit the fve-veor right t granted 10 Aes. iho Mohiorsnouidrecorine revenue ot 139000 = (4 (5 1a = F200 SoC A nos revenue recognized for the year ended December; 00,000 vt ” Scanned with CamScannerJed traning and wos open for bus ses Coto on 8 a eh ita ie Pate ae soto ea mene arene se Cote 9 ioe 00%, MD. oa op Sea ear esata sen =Ps0odh 2 escnpoe vt d 2208 n fig Fa eprent a Big ceone 720 oe Na Fong, equomant ond Mat roe od vara ne to tal nme tna a Ballets etl asap ocogso918 cot Sees heton gpurorea Ria ages ovens wos Rea ie ort ame et cae aan. roe 1 ee po ae nae fron r Revenue = P840,000 Feancrise fee Revenue = ail P72,000 » 20% Uneomed Fronchise Fees RRevenve from francrise Fee 123, PA00000 * PI,091,744 ~P48.000 = P1.443.744 ee ee ee a eee ene ae Ree ee cisseg a: VENRE omy sel ee Ste nS a Ee ea a pst eer ns eee ee 2 oo RB ‘Uneamed interest Income/Discount on Notes Receivable 266,000 Revenue trom Franchise Fees..... - 1,264,000 Uneamed Franchise Fees..... _ pone 2s0an ao ee ee Uneoned sence Revenue ficeingh cece oo pees eee e (25,000 + Pal,402 ~ P2,000), cs ot ¢ S10 aoe eee oo Uneomed Service Revenue (tranche) ca Tec vere el aa we : ; Serv. 2 Revenue (training). ee on Contrct with Customer: Franchise and Co ve Bes ss 347 w Pures 9 Sy 1 2 Ee aca ‘gr ay ~ 2 (iotes Receivable /Uneamed intered income 2.48685" x P14,000)), cna a (frat SFiS Fay 5 285, ancte ROVE nas (oerpaverve ajar wcropter 300 os scusson of Contract Ubity cot SES” CB secede Cer eee jUpesred We cone For wea «F400 See ee arches (PRO © FBS Fieg 13, 2005: (PEDBUS = 3] xB/12= PIBISF _ Tee ane go. b= December 3 Gly, 2005 Cash tes Recelvobie 00 e000 (@70.600 ~ Pee 000) | Fee e rom Notes Receivable jineomed infres! income Pc00 ~ 28485" x P4000) iS service Revenve (Training 3 Fionchise Revenue (P22,000 7186 "00 ans Uneornes Uneorner “Faz F9 184 - P2001 ‘by 1 2085 neamed Franchise Revenue teamed Service Revenve (Toit Franchise Revenue seqvice Revenve {trainingl wale 1" ons gh Pasi ae na Bb September 1, 2055 Ureesned sence Revenue (Tina z 1200 | service Revenue et sevice Revenue reser value o rary om 9YeO8 Te 00" Mo January 1, 2045: Cash ; Noles Receivable. a —— jBcoun on Noes Revsenen oe, Piggo0o8 0900 wee, es ™ Reels Sess oma Scalsncon ecco nareetom- mm Scanned with CamScanner348. ‘uneoned in Uneoned Service Revenve (Training)... Uneomed Franchise Revenue [P10,000 + P29,567-P3,600) 37. b Apa, 2005 neared Franchise Revenve .. Uneored Service Revenue (Training) wu Fronchise Revenve .. Service Revenve (raining .... 35.967 38. 4 December 31, 20:5 Unearned Service Revenue (Training) wes Service Revenue (Training) - P3,600 x 9/12 Therefore, he service revenue forthe year 20x5 amounted to 2.700 ‘Apa 1, 2085 (NO, 36) en 7 3,400 December 31, 20x5 (F3,600 x 9/12) 2H Totol es E6300 39. refer to Chapter 3 on discussion of Contract Liability _* danuary 1, 20%5: Cosh’ Notes RECENGDIE nnn Uneamed inieres! income /Disc Contract Liability (P16,000 + P29.567) *Down payment made on 4/1/45. 10,000.00 Present value of an ordinary annwity (P8000 x 369590) 22,567.20 Total revenue recorded by Campbell and total ‘Scquisition cost recorded by Lesley Benjomin.... P3?.567.20 40. b- December 31, 20%5: (P39,567'+ 5) = P7,919. al. = 20.000 100,000 Uneomed inlerest Income/biscouni on Notes Receivable (© 100,000 - 75,816) Uneamed Franchise Revenue (P: 379079) 104s, 3 asser 35967 3409 2700 1989 36" 24,64 9st a 4 6 & a ro 51 2 349 ree ereran e e e By 1 as oceerafoveue em eva tere ahs uneornchise Revenue = Fano 8 31, 205, pecembet "900 x 2%) ee Sn a 2 scoring sm Ie Te nea Gio ya me a, = eer ean ore eee om ‘d= fronchise arrongements typically include mutiple pertormance obligations becouse the goods and services Included in the extangement are both capable of being difinct fond ore separately identifiable. Scanned with CamScanner