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Unformatted text preview: P12-3 Corporation's intangible assets is as follows. 1On January 1, 2007, Haerhpin signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $75,000. Of this amount, $15,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $15,000 each, beginning January 1, 2008. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2007, of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is $43,700. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Haerhpin's revenue from the franchise for 2007 was $950,000. Haerhpin estimates the useful life of the franchise to be accounting treatment for the franchise fee and payments) 2Haerhpin incurred $65,000 of experimental and development costs in its laboratory to develop a patent that was granted on January 2, 2007. Legal fees and other costs develop a patent that was granted on January 2, 2007....
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This note was uploaded on 03/01/2012 for the course ACC all taught by Professor All during the Spring '12 term at University of Phoenix.
- Spring '12
- Intangible Assets