1. Castle Company sells a franchise that requires an initial franchise fee of $70,000. A down payment of $20,000 cash is required, with the balance covered by the issuance of a $50,000, 10% note, payable by the franchisee in five equal annual installments 1. Castle has substantially performed all material services, the refund period has expired and the collectibility of the note is reasonably assured. Cash20,000 Notes Receivable50,000 Franchise Revenue70,000 FASB 45

2. Castle Company sells a franchise that requires an initial franchise fee of $70,000. A down payment of $20,000 cash is required, with the balance covered by the issuance of a $50,000, 10% note, payable by the franchisee in five equal annual installments 2. The refund period has expired and the collectibility of the note is reasonably assured, but Castle has not substantially performed all material services. Cash20,000 Notes Receivable50,000 Unearned Franchise Fee70,000 FASB 45

3. Castle Company sells a franchise that requires an initial franchise fee of $70,000. A down payment of $20,000 cash is required, with the balance covered by the issuance of a $50,000, 10% note, payable by the franchisee in five equal annual installments 3. Castle has substantially performed all material services and the collectibility of the note is reasonably assured, but the refund period has not expired. Cash20,000 Notes Receivable50,000 Unearned Franchise Fee70,000 FASB 45

4. Castle Company sells a franchise that requires an initial franchise fee of $70,000. A down payment of $20,000 cash is required, with the balance covered by the issuance of a $50,000, 10% note, payable by the franchisee in five equal annual installments 4. Castle has substantially performed all material services and the refund period has expired, but the collectibility of the note is not reasonably assured. Cash20,000 Notes Receivable50,000 Unearned Franchise Fee50,000 Franchise Revenue20,000 FASB 45

5. Castle Company sells a franchise that requires an initial franchise fee of $70,000. A down payment of $20,000 cash is required, with the balance covered by the issuance of a $50,000, 10% note, payable by the franchisee in five equal annual installments 5. The refund period has expired, but Castle has not substantially performed all material services and there is no basis for estimating the collectibility of the note. Cash20,000 Unearned Franchise Fee20,000 FASB 45

6. Castle Company sells a franchise that requires an initial franchise fee of $70,000. A down payment of $20,000 cash is required, with the balance covered by the issuance of a $50,000, 10% note, payable by the franchisee in five equal annual installments 6. Castle has earned only $30,000 from providing initial services, with the balance being a down payment for continuing services. The refund period has expired and the collectibility is reasonably assurred. Cash20,000 Note Receivable50,000 Franchise Revenue30,000 Unearned Franchise Fee40,000 FASB 45

7. Castle Company requires a continuing franchise fee of $9,000 per year. The following 2 alternatives exists under plausible circumstances. Cash9,000 Continuing Franchise Fee Rev9,000 Cash9,000 Continuing Franchise Fee Rev 5,000 Unearned Franchise Fee4,000 FASB 45