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402 d. discontinue recognizing further collections exceed the contract costs. which date the 10-year license period starts to run. The franchise the performance obligations in the contract and how these how revenue will be recognized from the contract PROBLEM 4: MULTIPLE CHOICE - COMPUTATIONAL 1. On July 1, 20x1, Wash Co. grants a franchisee the right to Wash Co.'s products in a specific market over a period ar Chapter 8 revenue until the PROBLEM 3: EXERCISE On January 1, 20x1, Native Co. enters into a contract to grant a franchisee the right to use Native's trade name and sell Native's products for 10 years. In addition, Native also promises to provide the equipment necessary to operate the franchise store. The contract states a fixed consideration of P450,000 and a 5% sales- based royalty. The fixed consideration includes P150,000 payment for the equipment. This reflects the stand-alone selling price of the equipment. Native Co., 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. Native delivers the equipment to the customer on February 1, 20x1. The customer commences business operations on March 1, 20x1, a reports sales of P1,200,000 for the year. Requirements: Determine the following: i. will be satisfied. ii. the transaction price. ini. how the transaction price is allocated. iv. b. Provide the journal entries in 20x1. years. The franchise contract requires an a. upfront nee