How much franchise revenue should the franchisor record

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Question - Siomai Queen sells franchises for an initial fee of P100,000. The initial fee covers site selection, training, computer and accounting software, and on-site consulting and troubleshooting, as needed, over the first five years. On March 15, 2019, a franchisee signed a franchise contract, paying the standard P20,000 down with the balance due over 5 years with interest.

Assume at March 15, 2019, the time of signing the contract, collectability of the receivable was reasonably assured and there were no significant continuing obligations. The agreement provides that Pancake has the option to purchase within five years for P50,000 to acquire franchisee's business and it seems certain that Siomai Queen will exercise the option. How much franchise revenue should the franchisor record on March 15, 2019?

Reference no: EM133064175

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