Pickin Chicken, Incorporated, and Country Delight, Incorporated, both sell franchises for their chicken restaurants. The franchisee receives the right to use the franchisor's products and to benefit from national training and advertising programs. The franchisee agrees to pay \(\$ 50,000\) for exclusive franchise rights in a particular city. Of this amount, \(\$ 20,000\) is paid upon signing the franchise agreement and the remainder is payable in five equal annual installments of \(\$ 6,000\) each.

Pickin Chicken, Incorporated, recognizes franchise revenue as franchise agreements are signed, whereas Country Delight, Incorporated, recognizes franchise revenue on an installment basis. In 1979, both companies sold eight franchises. In 1980, they both sold five franchises. In 1981, neither company sold a franchise.

a Determine the amount of revenue recognized by each company during 1979, 1980, 1981, 1982, 1983, 1984, and 1985.

b When do you feel that franchise revenue should be recognized? Why?