Sunland Inn charges an initial fee of $ 2,448,000 for a franchise, with $ 489,600 paid when the agreement is signed and the balance in four annual payments. The present value of the annual payments,...

Sunland Inn charges an initial fee of $ 2,448,000 for a franchise, with $ 489,600 paid when the agreement is signed and the balance in four annual payments. The present value of the annual payments, discounted at 10%, is $ 1,551,000. The franchisee has the right to purchase $ 91,800 of kitchen equipment and supplies for $ 76,500. An additional part of the initial fee is for advertising to be provided by Sunland Inn during the next five years. The value of the advertising is $ 1,020 a month. Collectibility of the payments is reasonably assured and Sunland Inn has performed all the initial services required by the contract.


Prepare the entry to record the initial franchise fee