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Determine how much total revenue will krabs recognize

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Reference no: EM132739978

On December 31, 20x1, Mr. Eugene H. Krabs Co. enters into a contract with Sheldon J. Plankton Co. to transfer a license for a fixed fee of P100,000 payable as follows:

  1. 20% upon signing of contract
  2. 80% in 4 equal annual installments starting December 31, 20x2. The appropriate discount rate is 12%
  3. The license provides Plankton rights over Mr. Krabs' patented secret formula for a burger patty. The agreement requires Plankton to discontinue using its trade name and instead, use Mr. Krabs trade name for a period of four years. Plankton is bound by the terms of the contract to abide with Mr. Krab's policies on the use of the secret formula but is given the right to any subsequent modifications to the secret formula. Mr. Krabs provides the secret formula to Plankton on December 31, 20X1.

Problem 1: Using this information, how much total revenue will Krabs recognize in 20x2?

a. 0
b. 27,477
c. 80,747
d. 20,187

 

Reference no: EM132739978

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