User Account

All Pages

Determine the expense related to the franchise

Assignment Help Accounting Basics
Reference no: EM132729993

SAMSAN TECH entered into a franchise agreement with MORNING Company on January 1, 2019 to sell McJonald products for 10 years. The initial franchise fee, which is $20,000,000, was satisfied by SAMSAN by paying $4,000,000 as down payment, and by issuing a 5-year $16,000,000, 8%, note. The agreement states that MORNING shall provide the necessary initial services, and has already substantially performed all required initial services. The agreement further states that SAMSAN shall pay MORNING 5% of its annual sales every December 31 as a continuing franchise fee. The 2019 sales of SAMSAN total to $10,000,000; and the 2020 sales total to $14,300,000.

Determine the following using the data above:

Problem 1: The expense related to the franchise (excluding the interest expense on the note payable) shall be recognized in 2019?

a. $2,500,000
b. $2,000,000
c. $3,780,000
d. $2,715,000

Problem 2: The expense related to the franchise (excluding the interest expense on the note payable) shall be recognized in 2020?

a. $2,000,000
b. $2,500,000
c. $3,780,000
d. $2,715,000

Reference no: EM132729993

Questions Cloud

Prepare the journal entry to record the issuance of bonds : The market rate of interest for similar bonds without conversion rights was 6%. Prepare the journal entry to record the issuance of the bonds
Determine amount that should be reported as lease liability : HAN COMPANY entered into a 9-year (nine-year). Determine the amount that should be reported as lease liability on December 31, 2018
Agent-based modelling of collective behaviour : Agent-based Modelling of Collective and Coordinated Behaviour - The possibility for the user to put two circular patches of chosen size (radius) at chosen
Would this debit rent receivable and credit cash : Would this debit rent receivable and credit cash for $1,000? Or would this debit and credit unearned rent and rent earned
Determine the expense related to the franchise : Determine the expense related to the franchise (excluding the interest expense on the note payable) shall be recognized in 2019?
Why should an organization implement an erm application : Risk management is one of the most important components in empowering an organization to achieve its ultimate vision. With proper risk management culture.
What adjustment is needed to the cash balance book : The receipts were actually $43. The deposit slip for the bank was prepared correctly as $43. What adjustment is needed to the Cash balance book
How should tim report the nol : LLC reports an operating loss for $30,000. Tim is a 10% member of the LLC and has $2,300 basis for the LLC. How should Tim report the NOL?
What is the probability of a registration : What is the probability of a registration time shorter than 6 minutes?

Reviews

Write a Review

Accounting Basics Questions & Answers

  Explain what type of cost behavior believe would appropriate

List five costs that the company would incur. Explain what type of cost behavior you believe would be appropriate for each of these cost items.

  Speedy delivery systems can buy a piece of equipment that

speedy delivery systems can buy a piece of equipment that is anticipated to provide an 8 percent return and can be

  Find the latest financial statements

Find the latest financial statements for Coca Cola. Identify and/or calculate the following measures over the last three years:

  Using the dollar value lifo retailmethod

Calculate the inventory value at the end of the year using the dollar value LIFO retailmethod.

  What is the cost of the inventory on January

Lockout Company revealed the following inventory transactions: Jan. 5 Purchased 4,000 units @ P150. What is the cost of the inventory on January

  Calculate total goodwill and allocation

Date of Acquisition Consolidation Eliminating Entries Pennant Corporation acquired 80 percent of Saylor Company's common stock for $12,000,000 in cash.

  Determine the effect on corporate profits of making backing

Based on your transfer price, would you expect the ROI in the Backing Division to increase, decrease, or remain unchanged? Explain.

  At what type of bond price will havens have

Problem - Determining bond prices. At what type of bond price will Havens have total interest expense equal to the cash nterest payments

  Make a consolidated balance sheet at the date of acquisition

Make a consolidated balance sheet at the date of acquisition. On January 2, 2014, Prunce Company acquired 90% of the outstanding common stock of Sun Company

  Calculate the consolidated net income of poplar inc

Calculate the consolidated net income of Poplar Inc. and its subsidiary Spruce Ltd. for the year ended December 31, 2019. Determine

  Prepare a flexible manufacturing budget

Prepare a flexible manufacturing budget for the relevant range value using 25,000 unit increments. (List variable costs before fixed costs.)

  Prepare an incremental analysis for the special order

Pro Sports Inc. manufactures basketballs for the National Basketball Association (NBA). Prepare an incremental analysis for the special order

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd