Solution-What is the amount of total income to be reported

What is the amount of total income to be reported by mark

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Reference no: EM132594285

On January 1, 2020, Mark's Fried Chicken granted a franchise to Chicks Co to sell Mark's products. The franchise agreement provides for the following terms:

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. Chicks Co issued a 5-year non-interest bearing promissory note. The prevailing market rate of the similar note is 10%. The PV factor of P1 for five periods at 10% is 0.6209 and the PV factor of an annuity of P1 at 10% for five periods is 3.7908
Contingent franchise fee equal to 5% of the sales revenue of Chicks Co.As of December 31, 2020, Mark has not yet performed substantially all material services or conditions required of the franchise contract. For the year ended December 31, 2020, Chicks Co reported sales revenue in the amount of P1,000,000.

Question 1: What is the amount of total income to be reported by Mark for the year ended December 31, 2020?

Reference no: EM132594285

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What is the amount of total income to be reported by mark

Reference no: EM132594285

Reference no: EM132594285

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