Question
Best Burgers franchises its restaurants. Dominic Smith purchased a Best Burgers franchise on January 2, 2013 by paying $310,000 for the initial franchise fee, and
Best Burgers franchises its restaurants. Dominic Smith purchased a Best Burgers franchise on January 2, 2013 by paying $310,000 for the initial franchise fee, and agreeing to pay $4,400 a month in continuing franchise fees for advertising and promotion provided by Best Burgers, beginning immediately after the restaurant opens for business. In exchange for the initial franchise fee, Best Burgers will assist with site selection, building construction, and training of employees prior to the restaurant opening. Dominic Smith opens his Best Burgers Franchise on August 1, 2013. What amount of unearned franchise fee revenue would Best Burgers report at December 31, 2013 related to Dominic Smith's franchise?
$129,167
$180,833
$0
$310,000
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