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What franchise fee revenue to be recognized

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AAA Company charges its new franchisees an initial franchise fee of P2,500,000. Of this amount, P1,000,000 is payable in cash when the agreement is signed, and the remainder is to be paid in three equal annual installments which are evidenced by 12% interest-bearing note. In consideration therefore, AAA will assist in locating business site, conduct a market study to estimate earnings potential, supervise construction of a building, and provide initial training to employees. On December 1, 2020, AAA entered into a franchising agreement with PUP Company. By the end of the year, AAA had completed all of the initial services required at a cost of P800,000 and it has ascertained that the
collection of the note is reasonably assured.

Question 1: Franchise Fee Revenue to be recognized in 2020?

Question 2: Unearned Revenue to be recognized in 2020?

Question 3: Total Revenue and Net Income to be recognized in 2020?

Reference no: EM132949376

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