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On June 30, 2010, your client, Ferry Company, was granted two patents covering plastic cartons that it had been producing and marketing profitably for the past 3 years. One patent covers the manufacturing process, and the other covers the related products. Ferry executives tell you that these patents represent the most significant breakthrough in the industry in the past 30 years. The products have been marketed under the registered trademarks Evertight, Duratainer, and Sealrite. Licenses under the patents have already been granted by your client to other manufacturers in the United States and abroad and are producing substantial royalties. On July 1, Ferry commenced patent infringement actions against several companies whose names you recognize as those of substantial and prominent competitors. Ferry's management is optimistic that these suits will result in a permanent injunction against the manufacture and sale of the infringing products as well as collection of damages for loss of profits caused by the alleged infringement. The financial vice-president has suggested that the patents be recorded at the discounted value of expected net royalty receipts. Instructions(a). What is the meaning of "discounted value of expected net receipts"? Explain.
(B). What basis of valuation for Ferry's patents would be generally accepted in accounting? Give supporting reasons for this basis.
What are earnings before interest and taxes and What is net income and evaluate cash flow from operations?
Mantle Mfg. Co. issued a seven-year, non-interest bearing note with a face value of $800,000. Mantle received $361,900, resulting in an effective 12% interest rate. What is carrying value of the note at the end of the second year?
Compute the price of a bond and Compute the total value of the 90 bonds.
Calculate the cost per cart using direct labor hours to assign overhead costs and What is the gross margin on a deluxe golf cart?
Explain how the double-declining-balance method is computed. Provide an example of how this method could be used on the new delivery truck purchased for $300,000 to be used for 4 years with a salvage value of $5,000 for year one only.
a company acquires a rather large investment in another corporation. What criteria determine whether the investor should apply the equity method of accounting to this investment? Who has a current acquistion example to share?
Explain Why do some contracts have to be in writing? Should you put in writing some contracts that are legally enforceable even if they are only oral?
If a CPA knows that the client has a material error on a prior year’s return, he should not, without the client’s consent, disclose the error to the IRS.
Show the Journal entries for the purchase and the sale of shares.
After a preliminary assessment has been made of Lakeside's control risk, what possible actions can be taken by the auditors?
What was the average selling price of each share of common stock and How many shares of stock are outstanding, What amount should be reported for stockholders' equity
Management contends that the device merely represents an improvement of the existing communication system of the satellite and so should be capitalized
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