Wigs and Torys Plc. is a leading operator of pubs and pub restaurants in the United Kingdom. It operates and franchises about 10 wine restaurants under the name Bottoms Up Bar, primarily in London. Suppose that in contracting with a franchisee of an Bottoms Up Bar wine restaurant, Wigs and Torys agrees to provide services, including site selection, décor design, marketing, advertising, and
recruiting; and the franchisee agrees to pay Wigs and Torys £100,000 . It is common in the industry to permit the franchisee to pay in equal installments over several years. When should Wigs and Torys recognize revenue from the franchisee contract?
a. at the time Wigs and Torys Plc. signs the contract with the franchisee
b. as the cash is received by Wigs and Torys from the franchisee
c. as the income is earned by Wigs and Torys
d. at the end of the franchise period
e. half should be recognized when Wigs and Torys Plc. signs the contract with the franchisee and the other half after all the installments are received
B
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Assume that The Sandy Creek Nature Center, a private not-for-profit organization, started the fiscal year ending December 31, 2017 with $59,378 in temporarily restricted net assets. The amounts are restricted for the following: •restricted for educational programs relating to preservation of wetlands $18,000.•restricted for future equipment purchases $16,000 (Fixed assets are recorded as unrestricted when acquired) and •a promise to provide $5,000 each of the next six years for general support. Assume the pledge was made on December 31, 2016 and the present value of six (January 1) payments discounted at 5 percent is $25,378. During the fiscal year ended December 31, 2017, the following transactions occur:(a)The first $5,000 installment on the pledge receivable was
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