Franchise Accounting PDF
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Summary
This document provides information about franchise accounting. It details topics such as licensing, performance obligations, and transaction pricing. The information is useful for learning about the accounting practices related to franchises.
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05 Franchise Accounting AFAR By CSD AFAR BY CSD AFAR BY CSD Franchise Accounting License STEP 2: Identify the Performance STEP 3: Determine the...
05 Franchise Accounting AFAR By CSD AFAR BY CSD AFAR BY CSD Franchise Accounting License STEP 2: Identify the Performance STEP 3: Determine the Transaction Price FRANCHISE ACCOUNTING is one that “establishes a customer’s Obligations TP = Initial Franchise Fee rights to the intellectual property (IP) of Performance Obligation/s: the consideration for establishing the an entity.” 1. Not distinct franchise relationship and initial services Examples of licenses of IP: 2. Distinct Non-refundable upfront fees (down) 1. Software, technology; 1. separate utility Added to TP (allocated to POs) 2. Motion pictures, music, media 2. separately identifiable Recorded as unearned revenue 3. Franchises; and *if silent = distinct until PO is satisfied 4. Patents, trademarks, copyrights Examples of Performance Obligations: Note: evaluate whether a significant STEP 1: Identify the Contract with Customer 1. Right to use/access brand (tradename) financial component exists Contract = Franchise Agreement 2. Equipment, products, other goods If yes = use PV for TP (exclude int) franchisor grants to the franchisee the 3. Services (start-up, training) Interest = unearned interest income rights to sell the franchisor’s products and 4. Etc. (non-exhaustive list) To be amortized using effective use its name for a specified period interest method (table) Also, initial start-up service If
