What is the amount of total income to be reported

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Reference no: EM132736368

Question: On January 1, 2020, beng Inc.granted a franchise to Mr. lucky to sell Mr. beng products. The agreement provides the following terms:

a. Initial franchise fee in the amount of 15,000,000 payable at 5,000,000 down payment on January 1, 2020 and the balance payable in five equal annual installments every December 31. Mr. lucky issued 5-year non-interest bearing note. The prevailing rate is 10% and implicit rate is 12%.

b. Contingent franchise fee equal to 5% of the sales revenue of Mr. lucky. AS of December 31, 2020, beng Inc has not yet performed substantially all material services or conditions required of the franchise contract. For the year ended December 31, 2020, lucky reported sales revenue in the amount of 1,000,000. What is the amount of total income to be reported by beng for the year ended December 31, 2020?

Reference no: EM132736368

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