9/22/2023 Course hero On September 3, 2017, Robin Franchises a U.S. company, sold merchandise to a franchiseeRead NowIn the actual CPA board examination problems involving franchise accounting may require theĬomputation of the revenue (earned) from initial franchise fee to be recognized by theįranchisor and the amount of the unearned franchise fee at the end of the year. Usually the initial franchise fee is paid by the franchisee via a down payment with the balanceĮvidenced by a note payable in installment. Revenue Recognition-Initial Franchise Feeīefore a franchise is granted, an initial franchise fee is paid by the franchisee to the franchisor. There are two types of franchise fees, the initial franchise and Candidates should therefore be familiar with theĪccounting techniques and procedures applicable to this topic.įranchise agreement usually requires the franchisee to make payments, called the franchiseįees to the franchisor in consideration for the reputation, skill, products and servicesĬontributed by the franchisor. Included in the CPA examination more often. operation of restaurants, it is likely that franchise problems will be Increasing number of businesses requiring arrangement especially that of a service sponsor. Problems on franchising are seldom given in the actual CPA board examination but with Operating capital for the operation of the franchised business. ![]() The franchisee on the other hand, provides His expertise and on continuing basis provides guidance and duties on the manner in which theįranchisee must operate his establishment. ![]() The franchisor contributes his trade name, product, and company’s reputation. His brand of product or services to another party called the franchisee. There are two parties involve in franchising, namely the franchisor who grants the right to sell ![]() Franchises are rights to sell a specific brand of product or services in a certain geographic area.
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