3. On January 1, 2017, Sunland incurred organization costs of $295,000. What amo

Question

3. On January 1, 2017, Sunland incurred organization costs of $295,000. What amount of organization expense should be reported in 2017?

4. Sunland purchased the license for distribution of a popular consumer product on January 1, 2017, for $158,000. It is expected that this product will generate cash flows for an indefinite period of time. The license has an initial term of 5 years but by paying a nominal fee, Sunland can renew the license indefinitely for successive 5-year terms. What amount should be amortized for the year ended December 31, 2017?

Explanation / Answer

3 The amount to be reported = $295000 4 The amount to be amortized $0, as license can be renewed by paying a nominal fee

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