selected information follows for mount olympus corporation for three independent sit 4374038

Selected information follows for Mount Olympus Corporation for three independent situations: 1. Mount Olympus purchased a patent from Bakhshi Co. for $1.8 million on January 1, 2012. The patent expires on January 1, 2022, and Mount Olympus is amortizing it over the 10 years remaining in its legal life. During 2014, Mount Olympus determined that the patent’s economic benefits would not last longer than six years from the date of acquisition. 2. Mount Olympus bought a perpetual franchise from Carmody Inc. on January 1, 2014, for $650,000. Its carrying amount on Carmody’s books at January 1, 2014, was $750,000. Assume that Mount Olympus can only provide evidence of clearly identifiable cash flows for 25 years, but thinks the franchise could have value for up to 60 years. 3. On January 1, 2012, Mount Olympus incurred development costs (meeting all required criteria) of $375,000. Mount Olympus is an10rtizing these costs over five years. Instructions (a) In situation 1, what amount should be reported in the statement of financial position for the patent, net of accumulated amortization, at December 31, 2014? (b) In situation 2, what amount of amortization expense should be reported for the year ended December 31, 2014? (c) In situation 3, what amount, if any, should be reported as unamortized development costs as at December 31, 2014? View Solution:
Selected information follows for Mount Olympus Corporation for three independent

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