A telecommunications company hasacquired a 3G license. The license could besold or licensed to a third party. However, themanagement intends to use it to operate awireless network, and the development ofthe network starts when the license isacquired. Should borrowing costs on theacquisition of the 3G license be capitalizeduntil the network is ready for its intendeduse? Respond in no more than three (3)sentences.

Qualifying Asset -: A Qualifying Asset is simply another asset that puts up with a substantial…

A telecommunications company ha acquired a 3G license. The license c sold or licensed to a third party. Ho management intends to use it to op wireless network, and the developm the not work otorto when the lio on

A telecommunications company ha acquired a 3G license. The license c sold or licensed to a third party. Ho management intends to use it to op wireless network, and the developm the not work otorto when the lio on

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter4: Balance Sheet: Presenting And Analyzing Resources And Financing

Section: Chapter Questions

Problem 9Q

See similar textbooks

Similar questions

Bradley Co. is expanding its operations and is in the process of selecting the method of financing this program. After some investigation, the company determines that it may (1) issue bonds and with the proceeds purchase the needed assets or (2) lease the assets on a long term basis. Without knowing the comparative costs involved, answer these question: a. What disclosures should be made by lessees and lessors related to futurepayments?
Peak Industrial Corp. recently secured a loan to fund its new manufacturing facility. As part of the loan agreement, Peak Industrial incurred certain financing fees. How should these financing fees be treated in Peak Industrial’s financial statements? A)The fees should be immediately expensed in the income statement as they are directly associated with the loan acquisition. B) The fees should be capitalized and presented as a direct reduction of the carrying amount of the loan liability, amortizing the fees over the life of the loan. C) The fees should be recognized as a separate asset on the balance sheet and amortized over the life of the loan using a straight-line method. D)The fees should be deferred and amortized over the maximum possible term of the loan, including all extension options, regardless of the initial term agreed upon.
Pierogi Corp is deciding on buying a property for expanding its operation. The acquisition cannotbe afforded with the company’s current financial situation and a highly onerous bank loan may berequired in order to make the purchase possible. Meanwhile, the property proposed anotheroption that will still allow the company the use of the property. The owner is offering the propertyfor lease with a purchase option. In your opinion, which would be a better option?
A buyer working with QRS Realty wants to make an offer on a property. To save time, the buyer makes a verbal offer of $210,000 and the seller agrees. The offer is: -invalid because it does not include a closing date-unenforceable because it is not in writing-voidable because the licensee did not review the offer-unilateral because the contract is not exclusive
Which of the following is not an example of an item that would be a contingent asset? a A possible receipt of damages that is associated with a legal claim made against another entity. b A claim by a company against the State government about some land expropriated in 1997 for which the directors are of the opinion based on previous negotiations with the government that there is a strong indication of the claim being probable in the next period. c A company has started negotiations with a potential new customer and the directors are of the opinion that it is probable that there will be a sale in future periods from these negotiations. d None of the other options; all are contingent assets. 1
Able Equipment entered into an arrangement to provide M. T. Bin Wholesale’s data center with Able’s newest server model. Due to security processes in place for its customer data, M. T. Bin requires access to the equipment and the ability to direct its use. Able can replace or reconfigure the equipment if Able finds it’s financially advantageous to do so. Does the contract contain a lease?
2. When the franchisor supplies equipments and inventories without a reasonable profit, part of the initial franchise fee, sufficient to cover the estimated costs in excess of that price is * A.not recognized. B.deferred and recognized over the period the goods are likely to be sold to the franchisee C.deferred and recognized when finally sold to the franchisee D. recognized immediately
In which of the following instances is the capitalization of borrowing costs under PAS 23 would most likely be suspended? * A. Construction is temporarily stopped for the curing of concrete. B. Active development is stopped to give time for the engineers to reevaluate a design flaw. C. The construction of a bridge is disrupted by troubled waters. D. The construction of a building is discontinued because it is condemned by the government. The resumption of development is uncertain.
Big Construction Inc. has been capitalizing its borrowing costs in the construction of its PPE for its operations. However, during the current year, the company has been experiencing a an extended period of delay in which active development is delayed due to the impact of the COVID-19 pandemic. The capitalization of borrowing cost of the company A. May be extended at the discretion of the managerB. Shall never be suspendedC. Shall be suspendedD. May be suspended at the discretion of the auditorE. May be suspended at the discretion of the creditor
Which of the following is/are not capitalized as an intangible asset? Select one: a. Legal costs to defend a patent successfully and goodwill acquired when a company purchases another company. b. Costs of an internally developed patent and goodwill acquired when a company purchases another company. c. Costs of an internally developed patent and legal costs to defend a patent successfully. d. Goodwill acquired when a company purchases another company and costs to purchase a patent. e. Costs to purchase a patent and legal costs to defend a patent successfully.
An entity, a movie distribution company, licenses Movie XYZ to a customer. The customer, an operator of cinemas, has the right to show the movie in its cinemas for six weeks. In exchange for providing the license, the entity will receive a portion of the operator’s ticket sales for Movie XYZ. Which of the following statements is incorrect? a. The entity shall estimate the variable consideration, subject the estimate to the “constraining’ principle of PFRS 15, and recognize the resulting amount at the point in time when the license is transferred to the customer. b. The transaction price is a variable consideration. c. The fact that the performance obligation in the contract is satisfied over time or at a point in time is irrelevant when determining how revenue is recognized on the contract. d. The only performance obligation in the contract is the promise to grant the license.
On January 1, 20x1, Pongcuter Co. enters into a contract with a customer to grant a software licensefor ₱1,000,000. The fee is payable at contract inception. The license has a term of four years, toreckon from the date the customer can use the software. The customer can determine how andwhen to use the right without further performance by Pongcuter Co. and does not expect thatPongcuter Co. will undertake any activities that significantly affect the intellectual property towhich the customer has rights. The software is transferred to the customer on February 1, 20x1.However, the code, which is necessary for the customer to use the software, is transferred only onApril 1, 20x1. How should Pongcuter Co. recognize revenue from the fixed consideration in thecontract?a. in full on February 1, 20x1b. in full on April 1, 20x1c. deferred and amortized over four years starting on February 1, 20x1d. deferred and amortized over four years starting on April 1, 20x1