E12.4 Intangible Amortization

2. Palmiero bought a franchise from Dougherty Co. on January 1, 2021, for $350,000. The carrying amount of the franchise on Dougherty's books on January 1, 2021, was $500,000. The franchise agreement had an estimated useful life of 30 years. Because Palmiero must enter a competitive bidding at the end of 2030, it is unlikely that the franchise will be retained beyond 2030. What amount should be amortized for the year ended December 31, 2022?

In this case, what cost has to be utilized as a base cost for calculating amortizationoriginal cost of $350,000 or carrying amount of $500,000?

What is the difference between book value, fair value, and original cost, and which of them are used when calculating annual amortization?