Hermes Co., a private company, enters into a service concession arrangement wherebyHermes undertakes to build an airport for the government with a completion period of two (2)years, operate and maintain the airport for eight (8) years after completion, and transfer theairport to the government at the end of Year 10. In exchange, the government pays Hermes Co.2.P300 million per year in years 3 to 10. Hermes Co. makes the following estimates at thecontract inception:YearContract costsStand-alone Selling PriceConstruction service 1P400 millionForecast cost + 30%2P400 millionForecast cost + 30%Operation services3-10P10 millionForecast cost + 10%Compute for:a. Total transaction priceb. Carrying amount of the asset recognized on the contract at the end of year 3c. interest income over the term of the contract

In this problem we have given the contract cost of building…

Answered: Hermes Co., a private company, enters…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Tran Technologies licenses its functional intellectual property to Lyon Industries. Terms of the arrangement require Lyon to pay Tran $590,000 on April 1, 2024, when Lyon first obtains access to Tran’s intellectual property, and then in the future to pay Tran a royalty of 5% of future sales of products that utilize that intellectual property. Tran anticipates receiving sales-based royalties of $1,090,000 during 2024 and $1,590,000 per year for the years 2025 to 2029. Assume Tran accounts for the Lyon license as a right of use, because Tran’s actions subsequent to April 1, 2024, will not affect the benefits that Lyon receives from access to Tran’s intellectual property. Required: Access the FASB Accounting Standards Codification at the FASB website (www.fasb.org) and select Basic View for free access. Identify the specific nine-digit Codification citation (XXX-XX-XX-XX) for accounting for variable consideration arising from sales-based royalties on licenses of intellectual property,…
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Prepare a schedule showing the intangible assets section of Cheyenne's balance sheet at December 31, 2020. CHEYENNE CORPORATION Intangible Assets Prepare a schedule showing all expenses resulting from the transactions that would appear on Cheyenne's income statement for the year ended December 31, 2020. CHEYENNE CORPORATION Expenses Resulting from Selected Intangible Assets Transactions < <
A contract between two parties (company X & Y) was created such that in return for services rendered, company X would provide payments of $15,000 in 8 months, $35,000 in 16 months, and $40,000 in 24 months. However, a clause was inserted in the contract that allowed company X to pay two equal lump sum payments in months 30 and 36. If interest on the contract is 6.5% compounded annually, determine the value of the lump sum payments that should be written in the contract. When entering your answer, round your values to two decimal places, and use a $ symbol as well as the correct comma separator. For example $12,345.67 Answer: Answer
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Krawczek Company will enter into a lease agreement with Heavy Equipment Co. where Krawczek will make lease payments over the next five years. The lease is cancelable and requires equal annual payments of $20,800 per year beginning on January 1 of the first year. The last payment will be January 1 of year 5, and Krawczek will continue to use the asset until December 31 of that year. Other important information includes the following: The fair value of the equipment is $145,000. The applicable discount rate is an 8 percent annual rate. The economic life of the asset is 10 years. Krawczek does not guarantee the residual value of the asset at the end of the lease, and it does not expect to keep the asset at the end of the term. The asset is a standard piece of equipment. a. Is the lease an operating lease or a financing lease? multiple choice Operating lease Financing lease b. What will be the lease expense shown on the income statement at the end of year 1? c. What will…

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