The Racquet Store (RS) sells franchise agreements in which it charges an up-front fee of...
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The Racquet Store (RS) sells franchise agreements in which it charges an up-front fee of $50,000 for assistance in setting up a store, and then a monthly fee of $1,000 for national advertising and administrative assistance. Steffi Hingis signs a franchise agreement with RS. Assume that Steffi paid the $50,000 in cash when she signed the agreement. RS can recognize revenue associated with the $50,000:
A. When Steffi signs the agreement and pays the cash.
B. As soon as RS has assisted Steffi in setting up the store.
C. Gradually as RS provides advertising and administration services.
D. Only after the store has operated long enough for the chance of business failure to be remote.
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