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Chapter-9BarryBus21

# A b b c c d d 0 0 500000 500000 1000000

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Unformatted text preview: l Depreciation: (\$20,000,000 - \$0) 20 Years = \$1,000,000 per year 25 Disposal of Tangible Assets Cedar Fair sold a hotel for \$3,000,000 cash at the end of its 16th year of use. The hotel originally cost \$20,000,000, and was depreciated using the straight-line method with zero residual= Accumulated Depreciation value and a useful life of 20 years. (16 yrs. \$1,000,000) = \$16,000,000 The equipment's book value at Depreciation BV = Cost - Accumulated date of sale is: BV = \$20,000,000 - \$16,000,000 = \$4,000,000 a. b. c. d. \$4,000,000. \$3,000,000. \$17,000,000. \$16,500,000. 26 Disposal of Tangible Assets Cedar Fair sold a hotel for \$3,000,000 cash at the end of its 16th year of use. The hotel originally cost \$20,000,000, and was depreciated using the straight-line method with zero residual value and a useful life of 20 years. The equipment's sale resulted in: a. b. c. d. a loss of \$1,000,000. a gain of \$3,000,000. a gain of \$1,000,000. a loss of \$5,000,000. Loss = Cash Received - Book Value Loss = \$3,000,000 - \$4,000,000 = \$1,000,000 27 28 Intangible Assets Noncurrent assets without physical substance. Often provide exclusive rights or privileges. Intangible Assets Useful life is often difficult to determine. Usually acquired for operational use. 29 Intangible Assets ecord at current cash equivalent cost, including purchase price, legal fees, and filing fees. mortize intangibles with limited lives over the shorter of their economic lives or legal lives using the straightline method. 30 31 Patents and Licensing Rights A patent is an exclusive right granted by the federal government to sell or manufacture an invention. Cost is purchase price plus legal cost to defend. Amortize cost over the shorter of useful life or 20 years. Licensing rights grant limited permission to use a product or service according to specific terms and conditions. You may be using computer software that is made available to you through a campus licensing agreement. 32 Franchises A franchise provides legally protected rights to sell products or provide services purchased by a franchisee...
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