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.

Question

Quizplus · Accepted Answer

Continuing franchise fees are considered variable consideration and should be recognized as revenue when the uncertainty related to the variable consideration is resolved, in accordance with the revenue recognition principle.

Continuing Franchise Fees Should Be Recorded by the Franchisor