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On December 31, Year 1, Moon, Inc. authorized Luna Co. to operate as a franchisee for an initial franchise fee of $100,000. Luna paid $40,000 on signing the agreement and signed an interest-free note to pay the balance in three annual installments of $20,000 each, beginning December 31, Year 2. On December 31, Year 1, the present value of the note, appropriately discounted, is $48,000. Services for the initial fee will be performed in Year 2. In its December 31, Year 1, balance sheet, what amount should Moon report as unearned franchise fees?
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