Danube, Toggle, and ConnectOn rely on various intangible assets to operate their businesses. These companies amortize the cost these assets using the straight-line method over the following average estimated useful lives (in years), as reported in their annual reports. Type of Intangible Asset Developed Technology Trade Names Customer Relationships Danube Toggle ConnectOn 4.0 8.0 2.5 2.5 2.3 4.8 6.4 1.4 3.3 Assume each company spent $820,000 at the beginning of the current year for additional Developed Technology. Because of its proprietary nature, the technology is estimated to have no residual value at the end of its estimated life. Required: Calculate the impact (direction and amount) that the amortization of such expenditures would have on each company's Income from Operations in the current year. (Decreases should be indicated by a minus sign. Do not round intermediate calculations.)

Danube, Toggle, and ConnectOn rely on various intangible assets to operate their businesses. These companies amortize the cost these assets using the straight-line method over the following average estimated useful lives (in years), as reported in their annual reports. Type of Intangible Asset Developed Technology Trade Names Customer Relationships Danube Toggle ConnectOn 4.0 8.0 2.5 2.5 2.3 4.8 6.4 1.4 3.3 Assume each company spent $820,000 at the beginning of the current year for additional Developed Technology. Because of its proprietary nature, the technology is estimated to have no residual value at the end of its estimated life. Required: Calculate the impact (direction and amount) that the amortization of such expenditures would have on each company's Income from Operations in the current year. (Decreases should be indicated by a minus sign. Do not round intermediate calculations.)

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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Sarasota Corporation and Marigold Corporation, two companies of roughly the same size, are both involved in the manufacture of shoe-tracing devices. Each company depreciates its plant assets using the straight-line approach. An investigation of their financial statements reveals the following information. Net income Sales revenue Total assets (average) Plant assets (average) Intangible assets (goodwill) (a) (1) (2) (3) Return on assets Profit margin Asset turnover Sarasota Corp. $ 237,540 Save for Later 1,187,700 3,210,000 2,430,000 387,100 For each company, calculate these values: (Round answers to 2 decimal places, e.g. 6.25% or 17.54.) Marigold Corp. $316,050 Sarasota Corp. 1,264,200 3,010,000 1,828,000 do % do % 0 times Marigold Corp. % do % times Attempts: 0 of 3 used Submit Answer
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1 account treatment opotiom: capitalized/ depreciated or expensed
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