On December 1, 20x1, CANOROUS Co. granted a 5-year franchise right to MELODIOUS, Inc.

for an initial
franchise fee of ₱400,000 and a 10% sales-based royalty. The initial franchise fee is non-refundable and
due upon signing of the contract. At contract inception, CANOROUS determines that the nature of its
promise to grant the license is to provide the customer with the right to access CANOROUS’s intellectual
property as it exist throughout the license period. As of December 31, 20x1, CANOROUS has no
remaining obligation or intent to refund any of the cash received, all the initial services necessary to
setup the contract have been performed, and MELODIOUS started operating the franchised business.
MELODIOUS reported sales of ₱800,000 for 20x1. How much revenue shall CANOROUS recognize in
20x1?