Choice "D" is correct. Franchise fee revenue of $0 should be recognized in the current year because North's services per the franchise agreement were not complete in the current year. The $10,000 is the first payment of the $50,000 initial franchise fee that was to be paid in installments. From a franchisor's (North Co.) standpoint, initial franchise fees are not revenue until all material conditions of the sale have been "substantially performed." The services were stated in the question to not be complete.
Choice "b" is incorrect. Franchise fee revenue of $0, not the $10,000 that was received on the agreement's signing, should be recognized in the current year because North's services per the franchise agreement were not complete in the current year.
Choice "a" is incorrect. Franchise fee revenue of $0, not the $10,000 that was received on the agreement's signing and presumably the $10,000 that was to be paid at the beginning of the next year, should be recognized in the current year because North's services per the franchise agreement were not complete in the current year.
Choice "c" is incorrect. Franchise fee revenue of $0, not the full $50,000 initial franchise fee, should be recognized in the current year because North's services per the franchise agreement were not complete in the current year.