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Question - Pita Pal sells fast-food franchises. Pita Pal receives $76,000 from a new franchisee for providing initial training, equipment, and furnishings that together have a stand-alone selling price of $76,000. Pita Pal also receives $36,300 per year for use of the Pita Pal name and for ongoing consulting services (starting on the date the franchise is purchased). Rachel became a Pita Pal franchisee on March 1, 2021, and on May 1, 2021 Rachel had completed training and was open for business. How much revenue in 2021 will Pita Pal recognize for its arrangement with Rachel?
You are free to use any information available to you either via the memos or the competitor financial statements. Don't know where to begin?
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