At the beginning of the year, A Company got the franchise of B, a known steak house of upscale patronage. The franchise agreement required a franchise fee payable upon signing of the franchise and the balance in four annual installments starting the end of the current year. At present value using 12% as discount rate, the four installments would approximate P3,037,350. The fees once paid are not refundable. The franchise may be canceled subject to the provisions of the agreement. Should there be unpaid franchise fee attributed to the balance of main fee (P5,000,000), the same would become due and demandable upon cancellation. Further, the franchiser is entitled to 5% fee on gross sales payable monthly within the first ten days of the following month. The Credit Investigation Bureau rated the company as 1 + credit rating. The balance of the franchise fee was guaranteed by a commercial bank. The first year of operations yielded gross sales of P90 million, B's earned franchise fees from the company for the first year of operation, amounted?
At the beginning of the year, A Company got the franchise of B, a known steak house of upscale patronage. The franchise agreement required a franchise fee payable upon signing of the franchise and the balance in four annual installments starting the end of the current year. At present value using 12% as discount rate, the four
installments would approximate P3,037,350. The fees once paid are not refundable. The franchise may be canceled subject to the provisions of the agreement.
Should there be unpaid franchise fee attributed to the balance of main fee (P5,000,000), the same would become due and demandable upon cancellation. Further, the franchiser is entitled to 5% fee on gross sales payable monthly within the first ten days of the following month. The Credit Investigation Bureau rated the company as 1 + credit rating. The balance of the franchise fee was guaranteed by a commercial bank.
The first year of operations yielded gross sales of P90 million, B's earned franchise fees from the company for the first year of operation, amounted?
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