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Question - On Nov. 1, 2021, an entity enters into a franchise agreement to grant a franchisee the right to operate a ship using the entity's trademark for three years. As consideration, the franchisee pays an upfront fee plus sales-based royalty. The entity customarily undertakes activities that aim to further improve the trademark. Although those activities do not result in the direct transfer of a good or a service to the franchisee, it is expected that the franchisee will benefit from those activities. All the necessary preparations were completed and the franchisee starts operating the shop on Jan. 31, 2022. How would the entity recognize revenue from the initial franchise?
a. deferred and amortized from Nov. 1, 2021 to Jan. 31, 2022
b. in full on November 1, 2021
c. deferred and amortized over the license of the period starting Jan. 31, 2022
d. in full on January 31, 2022
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