28 Jun n Carla Vista Company has provided informati
Question
Carla Vista Company has provided information on intangible assets as follows.
A patent was purchased from Ford Company for $2,678,000 on January 1, 2016. Carla Vista estimated the remaining useful life of the patent to be 10 years. The patent was carried in Ford’s accounting records at a net book value of $1,967,000 when Ford sold it to Carla Vista.
During 2017, a franchise was purchased from Polo Company for $588,000. In addition, 5% of revenue from the franchise must be paid to Polo. Revenue from the franchise for 2017 was $2,649,000. Carla Vista estimates the useful life of the franchise to be 10 years and takes a full year’s amortization in the year of purchase.
Carla Vista incurred research and development costs in 2017 as follows.
Materials and equipment$142,500
Personnel186,400
Indirect costs 102,100
$431,000
Carla Vista estimates that these costs will be recouped by December 31, 2020. The materials and equipment purchased have no alternative uses.
On January 1, 2017, because of recent events in the field, Carla Vista estimates that the remaining life of the patent purchased on January 1, 2016, is only 5 years from January 1, 2017.
1) Need to solve for the amount of Patents and Franchises.
2) Need to solve for the amount for Amortization of patent, franchise, payment to Polo Company, Research and Development cos
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