Question
Manong Taho Co. enters into a franchise agreement on June 1, 2017 with Mr. Soya for a package with a total fee of P360,000. The
Manong Taho Co. enters into a franchise agreement on June 1, 2017 with Mr. Soya for a package with a total fee of P360,000. The right granted is to operate the business for four years. The terms of the payment provides that a down payment of P144,000 shall be paid and the balance is payable on May 31, 2019. Mr. Soya issued an 8% interest bearing note for the balance. The agreement provides for a royalty payment of 2% of the monthly gross sales.
The total fee of P360,000 includes the following with their stand-alone selling prices:
Rights to trade name and market area
P250,000
Machinery and equipment (food stall) (cost - P80,000)
100,000
Site location; feasibility studies; training and other services
50,000
All the services inclusive in the package were performed as of October 30, 2017 while equipment was installed only on January 1, 2018. The franchise commenced operations on January 15, 2018. The total gross sales in 2018 amounted to P1,500,000.
According to IFRS 15Revenue from Contracts withCustomers, how much of the total contract price is allocated to the transfer of rights, sale of equipment and services, respectively?
- No answer provided
- a. 225,000; 90,000; 45,000
- b. 360,000; 0; 0
- c. 250,000; 100,000; 50,000
- d. 120,000; 120,000; 120,000
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