Assignment:
Dreamfilms, an Islandian corporation, produced a film called "IslandLife" based on Islandian folklore. The film was shot entirely in English and was intended for an American audience. Dreamfilms sold the rights to the film to Explorafilms, a U.S. distribution company. Explorafilms will only broadcast "IslandLife" on U.S. television. Under the terms of the agreement Dreamfilms will receive 10% of gross receipts every time the film is televised.
1. What is the source of this income to Dreamfilms?
2. How would your answer be different if, under the agreement, the only payment received by Dreamfilms for the sale of the film was a lump-sum of $50,000 upon delivery of the film?