Continuing Franchise Fees Should Be Recorded by the Franchisor

question 35

Multiple Choice

Continuing franchise fees should be recorded by the franchisor

• A)as revenue when uncertainty related to the variable consideration is resolved.
• B)as revenue when received.
• C)in accordance with the accounting procedures specified in the franchise agreement.
• D)as revenue only after the balance of the initial franchise fee has been collected.

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Definitions:

Acceptance

A key factor in the agreement element of a contract; consists of the agreement of one party, the offeree, to the terms of the offer in the contract made by the other party, the offeror.

True Value

The actual, intrinsic value of an asset, investment, or property, considering all underlying factors.

Commingled Fungible Goods

Items that are interchangeable with others of the same type, which have been mixed or blended, making individual properties indistinguishable.

Contributing Parties

Entities or individuals that contribute resources, information, or efforts towards a common project, goal, or agreement.