On January 1, 20x1, Nat Company enters into a contract to grant a franchise the right to use Nat Company trade name and sell its products for 10 years. In addition, Nat Company also promises to provide the equipment necessary to operate the franchise store. The franchise state a fixed consideration of Php 450,000 and a 5% sales based royalty. The fixed consideration includes Php 150,000 down-payment for the equipment. This reflects that stand alone selling price of the equipment. Nat Company, as a franchisor, has developed a customary business practice to undertake activities such as analyzing the customer's changing preferences and implementing product improvements, pricing strategies, marketing campaigns and operational efficiencies to support the franchise name. Nat Company delivers the equipment to the customer on February 1, 20x1. The customer commences business operations on March 1, 20x1 at which date the 10-year license period start to run. The franchisee reports sales of Php 1.2M for the year. 1. The performance obligations in the contract and how these will be satisfied 2. The transaction price 3. How will the transaction price be allocated 4. How will the revenue be recognized