Debbie Acquired a Franchise to Operate a Donut Shop from Dollar

question 77

Multiple Choice

Debbie acquired a franchise to operate a donut shop from Dollar Donuts, Inc., for $100,000. She incurred an additional $4,000 in legal costs to negotiate the terms with the franchiser. In five years, the franchise contract will be renegotiated. The current contract also states that there will be a $3,000 annual fee plus a two percent charge based on the store's annual revenue, which is expected to average 90,000 per year. What is the franchise cost that should be capitalized?

• A) $88,000
• B) $92,000
• C) $100,000
• D) $104,000

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Definitions:

Snoring

Snoring is the noisy breathing during sleep caused by the vibration of soft tissues in the throat area.

NREM Sleep

Non-Rapid Eye Movement Sleep, a type of sleep that is characterized by slower brain waves and is considered restful and restorative.

General Adaptive Syndrome

A three-stage response (alarm, resistance, exhaustion) that the body undergoes while under stress, described by Hans Selye.

Stressors

External or internal forces or events that cause stress to an individual, potentially affecting their mental and physical well-being.