Chapter 20 Problem 20-41 to 45
Problem 20-41 Answer A
Problem 20-42 Answer C
Downpayment 2,000,000
Present value of annual payment for 4 years (1,000,000 x 2.91) 2,910,000 Cost of franchise 4,910,000
Problem 20-43 Answer A
Design costs 1,500,000
Legal fees of registering trademark 150,000
Registration fee with Patent Office 50,000
Total cost of trademark 1,700,000
Problem 20-44 Answer B
Original lease 12 years
Extension 8
Total life 20
Less: Years expired (2006 and 2007) 2
Remaining life 18 years
Life of improvement (shorter) 15 years
Leasehold improvement 540,000
Less: Depreciation for 2008 (540,000 / 15) 36,000
Book value 504,000
Problem 20-45 Answer D
Depreciation (3,600,000 / 6) 600,000
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