school

Under a four year agreement a car seat wholesaler (CarSeat) buys its seats from a manufacturer (ManuFac). Under the terms of the agreement, CarSeat licenses its know-how to ManuFac royaltyfree to allow it to construct a machine capable of manufacturing the car seats to CarSeat's specifications. Ownership of the know-how remains with CarSeat and the machine has an economic life of four years. CarSeat pays an amount per car seat produced to ManuFac; however, the agreement states that a minimum payment will be guaranteed each year to allow ManuFac to recover the cost of its investment in the machinery. The agreement states that the machinery cannot be used to make seats for other customers of ManuFac and that CarSeat can purchase the machinery at any time (at a price equivalent to the minimum guaranteed payments not yet paid). Required Explain in sufficient details how should CarSeat account for this arrangement