McDonalds, Sonic, Burger King, and Kentucky Fried Chicken Are Examples

question 4

Multiple Choice

McDonalds, Sonic, Burger King, and Kentucky Fried Chicken are examples of a(n) ________ because the franchise operate under the franchisor's business name and act subject to the franchisor's standards and methods of business operation.

• A) distributorship
• B) manufacturing arrangement
• C) chain-style business operation
• D) multiple business franchise
• E) entrepreneurship agreement

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Definitions:

Impairment Loss

A reduction in the recoverable value of a fixed asset or goodwill below its book value, leading to a write-down and charge against earnings.

Cost Method

An accounting method where investments are recorded at their acquisition cost without subsequent change except for impairment.

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Goodwill Impairment

A charge that companies record when the book value of goodwill on their balance sheets exceeds its fair market value, indicating that the asset has lost value.