On January 1, 20x1, an entity granted a franchise to a franchisee.The franchise agreement required the franchisee to pay a nonrefundable upfront fee in the amount of P480,000 and ongoing payment of royalty equivalent to 8% of the sales to the franchisee. The franchisee paid the nonrefundable upfront fee on January 1, 20x1.
 
In relation to the nonrefundable upfront fee, the franchise agreement required the entity to render the following performance obligations:
 
a.      To construct the franchisee's stall with a stand-alone selling price of P240,000.
b.      To deliver 10,000 units of raw materials to the franchisee with a stand-alone selling price of P300,000.
c.      To allow the franchisee to use the entity's tradename for 10 years starting January 1, 20x1, with a stand-alone selling price of P60,000.
 
On June 30, 20x1, the entity completed the construction of the franchisee's stall. On December 31, 20x1, the entity was able to deliver 4,000 units of raw materials to the franchisee. For the year ended December 31, 20x1, the franchisee reported sales revenue amounting to P150,000.


The entity had determined that the performance obligations are separate and distinct from one another.


Need Solution
1.      Amount allocated to the construction of franchisee's stall                                          
 
2.      Revenue pertaining to the use of delivery of raw materials                                
 
3.      Revenue pertaining to the use of tradename                                                    
 
4.      Total franchise fee revenue                                                                    






On January 1, 20x1, Agatha Company entered into a long-term construction contract with a fixed contract price of P2,250,000. The construction started on July 1, 20x1, and ended on October 31, 20x3. The chief accountant of Agatha provided the following costs:


   
 20x120x220x3
   Contract costs incurred to dateP500,000P1,832,000P2,278,125
   Estimated costs to complete at the end of the year1,500,000820,125-
   
Assuming the outcome of the construction can be estimated reliably, and the company decided to employ cost-to-cost method, compute the following:


1.      Realized gross profit (loss) for the year ended December 31, 20x1                                
2.      Percentage of completion for 20x2                                                                              
3.      Anticipated loss_____________
4.     Realized gross profit (loss) for the year ended December 31, 20x2 _______________




On January 1, 20x1, Entity A, a public entity, and Entity B, a public entity, incorporated C, which has its fiscal and operational autonomy. The contractual agreement of the incorporating entities provided that the decisions on relevant activities of Entity C will require the unanimous consent of both entities. Entity A and Entity B will have the rights to the net assets of Entity C.

Entity A and Entity B invested P2,000,000 and P3,000,000 respectively, equivalent to 40:60 capital interest of Entity C. the financial statement of Entity C provided the following data for its two-year operation:


 Net income (loss)Dividends declared
   20x1                                                                  450,000                                        225,000
   20x2                                                            (P4,500,000)                                              -
 
Compute the balance of investment in Entity C to be reported by:
1.      Entity A on December 31, 20x2                                  
 
2.      Entity B on December 31, 20x2