Question
Accounting for Franchises On April 1, 2020, Gershwin Corporation obtained a franchise from Sonic Hedgehog Inc. for a cash payment of $1,200,000. The franchise grants
Accounting for Franchises
On April 1, 2020, Gershwin Corporation obtained a franchise from Sonic Hedgehog Inc. for a cash payment of $1,200,000. The franchise grants Gershwin the right to sell certain products and services for 8 years.
Prepare Gershwins journal entries relating to this franchise on the dates listed.
| Date | Account | Debit | Credit |
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| 04/01/2020 | Franchise | 120,000 |
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| Cash |
| 120,000 |
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| 12/31/2020 | Franchise Amortization Fee (120/8yr*9/12month) | 11,250 |
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| Franchise |
| 11,250 |
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| 12/31/2021 |
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| 12/31/2022 |
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| 12/31/2023 |
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| 12/31/2024 |
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| 12/31/2025 |
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| 12/31/2026 |
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| 12/31/2027 |
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| 03/31/2028 |
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
