Download Chapter 11 Advance Accounting Solman PDF

TitleChapter 11 Advance Accounting Solman
TagsIncome Statement Profit (Accounting) Expense Franchising Revenue
File Size189.9 KB
Total Pages12
Document Text Contents
Page 11

Schedule 1: Computation of initial FF to the recognized:
Total initial fee ........................................................................................................... P750,000
Less: Interest unearned on the note......................................................................... ( 145,100)
A

Market value of inventory.............................................................................. ( 80,000)
B

Market value of equipment............................................................................ ( 62,500
B

Deficiency in continuing costs....................................................................... ( 175,200)
C

Adjusted initial FF....................................................................................................... P287,200

A. Unearned Interest:
Face value of the note........................................................................................... P600,000
Present value (120,000 x 3.7908).......................................................................... 454,900

rounded

Unearned interest.................................................................................................. P145,100

B. Market value of equipment and inventory:
Equipment (P50,000  80%)................................................................................. P 62,500
Inventory.............................................................................................................. 80,000

Income from Sales:
Equipment Inventory Total

Sales Price. .................................................. P62,500 P80,000 P142,500
Cost............................................................. 50,000 68,000

118,000

Net income .................................................. P12,500 P12,000 P 24,500

C. Analysis of Continuing costs:
Market value of costs is P4,000/Mo. or P48,000 / yr.
Continuing Fees:

Years 1-4 Years 5-16 Years 17-20

Gross revenues ........................................... P330,000/mo. P450,000/mo. P500,000/mo.
Gross fees per month................................... P 2,475/mo. P 3,375/mo. P 3,750/mo.

Gross fees per year...................................... P 29,700 P 40,500 P 45,000
Market value of continuing costs................ ( 48,000) ( 48,000) ( 48,000)

Deficiency per year...................................... ( 18,300) ( 7,500) ( 3,000)
Number of years.......................................... x 4 x 12 x 4

Deficiency ........................................... P( 73,200) P( 90,000) P( 12,000)

Total deficiency for 20 years is P175,200
203
Chapter 11

Problem 11-7, continued:

Dates of Revenue Recognition:...................................................... Types of Revenue

January 12, 2013............................................................ Sale of equipment
June 1, 2013................................................................... Sale of inventory
July 1, 2013.................................................................... Initial FF (as adjusted0

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