ACT191 Quiz 5 on Franchising Accounting PDF

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ACT191 Quiz 5 on Franchising Accounting3rd term AY 2020-1 15 provides that initial franchise fee shall be recognized as revenue over time if any oneof the following criteria provided below is met. Which of the following indicator shows that theinitial franchise fee shall be recognized as revenue at ...

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ACT191 Quiz 5 on Franchising Accounting 3rd term AY 2020-2021

1.PFRS 15 provides that initial franchise fee shall be recognized as revenue over time if any one of the following criteria provided below is met. Which of the following indicator shows that the initial franchise fee shall be recognized as revenue at a point in time instead over time?Required to answer. Single choice. (0/1 Point) When the franchisee has legal title to the franchisor and has the significant risks and rewards of ownership of the franchise. When the franchisor's performance does not create an asset with alternative use to the franchisor and the franchisor has an enforceable right to payment for performance completed to date. When the franchisee simultaneously receives and consumes the benefits provided by the franchisor's performance as the franchisor performs. When the franchisor's performance creates or enhances an asset that the franchisee controls as the asset is created or enhanced. Your answer to question 1 is wrong. Correct answers: When the franchisee has legal title to the franchisor and has the significant risks and rewards of ownership of the franchise.

2.Franchise fee revenue shall be recognized when all material services or conditions have been substantially performed or satisfied by the franchisor. Substantial performance meansRequired to answer. Single choice. (1/1 Point) Franchisor has no remaining obligation or intent to refund money or forgive unpaid debt. Substantially all initial services has been performed. No other material conditions or obligations exist. All of these define substantial performance by the franchisor. Correct answers: All of these define substantial performance by the franchisor.

3.Under PAS 18, continuing franchise fees should be recorded by the franchisorRequired to answer. Single choice. (1/1 Point) In accordance with the accounting procedures specified in the franchise agreement. As revenue when received. As revenue only after the balance of the initial franchise fee has been collected. As revenue when earned and receivable form the franchisee. Correct answers: As revenue when earned and receivable form the franchisee.

4.Revenue is recognized upon completion of substantial performance and used when realization of revenue is reasonably assured.Required to answer. Single choice. (1/1 Point) Cost Recovery Method Percentage of Completion Method Accrual Method Installment Method

Deposit Method Correct answers: Accrual Method

5.Under PFRS 15, when shall a franchisor recognize revenue from contingent franchise fee or revenue for a sales-based royalty?Required to answer. Single choice. (1/1 Point) When the sales of the franchisee occurs. When the performance obligation to which some or all of the contingent franchise fees or sales-based royalty has been satisfied or partially satisfied. When both events occur. When either of the event occurs. Correct answers: When both events occur.

6.Under PFRS 15, how may an entity satisfy a performance obligation under in a contract with customers?Required to answer. Single choice. (1/1 Point) Satisfaction of performance obligation over time. Satisfaction of performance obligation at a point in time. Either of the choices. Neither of the choices. Correct answers: Either of the choices.

7.Under PFRS 15, which of the following factors indicates that the revenue from contracts with customers is recognized from the moment the entity satisfies the performance obligation at a point in time?Required to answer. Single choice. (1/1 Point) When the customer simultaneously receives and consumes all the benefits provided by the entity as the entity performs. When the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date. When the entity’s performance creates or enhances an asset that the customer controls as the asset is created. When the entity has transferred physical possession of the asset to the customer. Correct answers: When the entity has transferred physical possession of the asset to the customer.

8.It is charged for services rendered to the franchisee subsequent to initial services performed.Required to answer. Single choice. (1/1 Point) Indirect Cost Initial Direct Cost Continuing Franchise Fee Initial Franchise Fee Correct answers: Continuing Franchise Fee

9.What is the measurement of franchise revenue recognized from franchise contract?Required to answer. Single choice. (1/1 Point) Fair value of the consideration received or receivable. Book value of the consideration received or receivable. Carrying amount of the consideration received or receivable. Nominal amount of the consideration received or receivable. Correct answers: Fair value of the consideration received or receivable....