for $365,000. The carrying amount of the franchise on Alexander’s
books on January 1, 2016, was $515,000. The franchise agreement had
an estimated useful life of 30 years. Because Cullumber must enter a
competitive bidding at the end of 2018, it is unlikely that the franchise
will be retained beyond 2025. What amount should be amortized for the
year ended December 31, 2017? 3. On January 1, 2017, Cullumber
incurred organization costs of $282,500. What amount of organization
expense should be reported in 2017? 4. Cullumber purchased the license
for distribution of a popular consumer product on January 1, 2017, for
$153,000. It is expected that this product will generate cash flows for an
indefinite period of time. The license has an initial term of 5 years but by
paying a nominal fee, Cullumber can renew the license indefinitely for
successive 5-year terms. What amount should be amortized for the year
ended December 31, 2017? Exercise 12-14 (Part Level Submission)
Presented below is net asset information related to the Skysong Division
of Santana, Inc. The purpose of the Skysong Division is to develop a
nuclear-powered aircraft. If successful, traveling delays associated with
refueling could be substantially reduced. Many other benefits would also
occur. To date, management has not had much success and is deciding
whether a write-down at this time is appropriate. Management estimated
its future net cash flows from the project to be $425 million.
Management has also received an offer to purchase the division for $330
million. All identifiable assets’ and liabilities’ book and fair value
amounts are the same.
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ACC 422 Week 4 DQ 1
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What are the criteria for classifying an item as a current liability?
What are some examples of current liabilities?