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Chapter 1 1 Team Problem Information concerning Cao Corporation's intangible assets is as follows. On January 1 , 2 0 2 5 , Cao signed
Chapter Team Problem Information concerning Cao Corporation's intangible assets is as follows. On January Cao signed an agreement to operate as a franchisee of ATK Ltd for an initial franchise fee of $ Of this amount, $ was paid when the agreement was signed, and the balance is payable in annual payments of $ each, beginning January The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January of the annual payments discounted at the implicit rate for a loan of this type is $ The agreement also provides that of the revenue from the franchise must be paid to the franchisor annually. Cao's revenue from the franchise for was $ Cao estimates the useful life of the franchise to be years. Hint: You may want to refer to Appendix A to determine the proper accounting treatment for the franchise fee and payments. Cao incurred $ of experimental and development costs in its laboratory to develop a patent that was granted on July Legal fees and other costs during associated with registration of the patent totaled $ Expenditures for successful litigation in defense of the patent totaling $ were paid on November Cao estimates that the useful life of the patent will be years. A trademark was purchased from Jian Company for $ on January Cao estimates that the useful life of the trademark will be years from the date of acquisition Instructions: Prepare a schedule showing the intangible assets section of Cao's balance sheet at December Show supporting computations in good form. EXAMPLE OF FORMAT CORP NAME Intangible Assets Date Intangible #net of accumulated amortization Intangible #net of accumulated amortization Total Intangible Assets $ Schedule Intangible Asset # Cost of intangible YR Current year amortization Cost of intangible #net of amortization $ List the intangible: goodwill, franchise, patent, trademark, etc...
Chapter Team Problem
Information concerning Cao Corporation's intangible assets is as follows.
On January Cao signed an agreement to operate as a franchisee of ATK Ltd for
an initial franchise fee of $ Of this amount, $ was paid when the
agreement was signed, and the balance is payable in annual payments of $ each,
beginning January The agreement provides that the down payment is not
refundable and no future services are required of the franchisor. The present value at
January of the annual payments discounted at the implicit rate for a loan
of this type is $ The agreement also provides that of the revenue from the
franchise must be paid to the franchisor annually. Cao's revenue from the franchise for
was $ Cao estimates the useful life of the franchise to be years. Hint:
You may want to refer to Appendix A to determine the proper accounting treatment for
the franchise fee and payments.
Cao incurred $ of experimental and development costs in its laboratory to
develop a patent that was granted on July Legal fees and other costs during
associated with registration of the patent totaled $ Expenditures for successful
litigation in defense of the patent totaling $ were paid on November Cao
estimates that the useful life of the patent will be years.
A trademark was purchased from Jian Company for $ on January Cao
estimates that the useful life of the trademark will be years from the date of acquisition
Instructions: Prepare a schedule showing the intangible assets section of Cao's balance
sheet at December Show supporting computations in good form.
EXAMPLE OF FORMAT
CORP NAME
Intangible Assets
Date
Intangible #net of accumulated amortization
Intangible #net of accumulated amortization
Total Intangible Assets
$
Schedule Intangible Asset #
Cost of intangible YR
Current year amortization
Cost of intangible #net of amortization
$
List the intangible: goodwill, franchise, patent, trademark, etc...
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