iPhone-Fix is a franchisor that grants the right to operate an iPhone and laptop repair shop using the companys name, marketing materials, and branding. On July 1,2020, a franchisee entered into a 5-year contract to open a iPhone-Fix location in Davis in exchange for a $200,000 initial franchise fee. The franchisee also pays $10,000 for the equipment needed to perform repair services. This equipment could be sourced from many different suppliers. As part of the franchise contract, the franchisee is required to pay 10% of all sales to iPhone-Fix. Based on history from the opening of many franchise locations, iPhone Fix expects sales for the new franchise to be $100,000 per month.

Use this information for the next 2 questions.

1) How many performance obligations does iPhone-Fix have for the contract with the franchisee?

a. 0

b. None of the listed options

c. 2

d.1

e.3

2. What is the amount of revenue that iPhone-Fix will recognize in 2020 related to this contract?

a. 60,000

b. 90,000

c. 40,000

d. 210,000

e. 200,000