How should CarSeat account for this arrangement

Assignment Help Accounting Basics
Reference no: EM132564390

Question - Under a four-year agreement a car seat wholesaler (CarSeat)buys its seats from a manufacturer (ManuFac).

Under the terms of the agreement, CarSeat licenses its know-how to ManuFac royalty-free to allow it to construct a machine capable of manufacturing the car seats to CarSeat's specifications.

Ownership of the know-how remains with CarSeat and the machine has an economic life of four years.

CarSeat pays an amount per car seat produced to ManuFac; however, the agreement states that a minimum payment will be guaranteed each year to allow ManuFac to recover the cost of its investment in the machinery.

The agreement states that the machinery cannot be used to make seats for other customers of ManuFac and that CarSeat can purchase the machinery at any time (at a price equivalent to the minimum guaranteed payments not yet paid).

Requirement - How should CarSeat account for this arrangement?

Reference no: EM132564390

Questions Cloud

Natural disaster response operations domestically : Active Duty and National Guard units have been used in the past during natural disaster response operations domestically and internationally.
Which format has been adopted by hsbc : What is the difference between these formats? Which format has been adopted by HSBC and what is the underlying assumption? Provide evidence from annual report.
Why is important in understanding hsbc financial statement : Find why the going concern basis is important in understanding HSBC financial statement; Support your answer with evidence from HSBC annual report.
Define what information is provided in the balance sheet : The Balance Sheet: Referencing this week's readings and lecture, what information is provided in the balance sheet? What is a common-sized balance sheet.
How should CarSeat account for this arrangement : Ownership of the know-how remains with CarSeat and the machine has an economic life of four years. How should CarSeat account for this arrangement
Bckground of product innovation charter : Bckground of Product innovation Charter includes three things (Organization, Personal and Situation ) all these things governs
Organizational strategy and project selection : Differentiating common organizational structures and how they affect project processes and activities. Describing methods for conflict resolution
How to make a stimulation in power and influence : How to make a stimulation in power and influence? Change management stimulation
Analyze ford motor company balance sheet : In a two- to three-page paper (not including the title and reference pages), explain the purpose of a balance sheet and analyze Ford Motor Company's balance.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Analyze funding opportunities for small businesses

analyze funding opportunities for small businesses including the role of the small business administration sba.then

  What is the cost of abnormal loss

Waykita Foods manufactures corn meal in a continous, mass production process. What is the cost of abnormal loss? How is this cost treated in May

  Briefly explain what each specializes in mortgages

Research how financial markets and institutions influence the US and global economies. Briefly explain what each specializes in mortgages

  Evaluate the following question and give a hypothetical

Evaluate the following question and give a hypothetical example that will back up your answer

  What is the cost of direct labor

Assume that there exist unlimited demand, unless otherwise stated. Assume further that the dentist gets paid $100 per hour.

  Prepare the analysis for selected local government entity

Prepare the analysis for the selected local government entity, including information on the introduction, financial section

  Evaluate the reasons for using excel in maintaining key

tables maintaining please respond to the followingevaluate the reasons for using excel in maintaining key accounting

  Accounting principle or concept justifies

A hotel shows office supplies such as stationary on its balance sheet as $500 asset, even though to any other hotel these supplies might have a value only a scrap paper. Which accounting principle or concept justifies this?

  Calculate the dollar value of the Blu-ray players

When the buyer for Superior Electronics took physical inventory of the Blu-ray players on July 31, Calculate the dollar value of the Blu-ray players

  Cindy burnson the manager of fondlike company was agonizing

cindy burnson the manager of fondlike company was agonizing over an offer for an order requesting 7000 boxes of

  Calculate the amount of over- or underapplied overhead

The company applies overhead on the basis of 125% of direct labor costs. Calculate the amount of over- or underapplied overhead.

  A bakery that orders cartons of bread mix

A bakery that orders cartons of bread mix has used an EOQ model to determine that an order quantity of 90 cartons per order is economically optimal. The bakery needs 150 cartons per month to meet demand.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd