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ms of the arrangement require the operato Construct a road-completing construction v Maintain and operate the road for three ye Resurface the road when the original surfa operator estimates that it will have to unde The government grants the operator the rig The contract ends in year 5.

ms of the arrangement require the operato Construct a road-completing construction v Maintain and operate the road for three ye Resurface the road when the original surfa operator estimates that it will have to unde The government grants the operator the rig The contract ends in year 5.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The terms of the arrangement require the operator to: Construct a road-completing construction within two years Maintain and operate the road for three years Resurface the road when the original surface has deteriorated below a specified condition. The operator estimates that it will have to undertake the resurfacing at the end of year 4. The government grants the operator the right to collect toll fees from road users. The contract ends in year 5. The operator makes the following estimates: Year Contract Cost Stand-alone selling price Construction Services 1 70 Forecast cost +10% 2 80 Forecast cost +20% Operation Services Road resurfacing 3-5 25 Forecast cost +30% 4 15 Forecast cost +10% Compute the carrying amount of intangible asset at the end of year 2.
Transcribed Image Text:The terms of the arrangement require the operator to: Construct a road-completing construction within two years Maintain and operate the road for three years Resurface the road when the original surface has deteriorated below a specified condition. The operator estimates that it will have to undertake the resurfacing at the end of year 4. The government grants the operator the right to collect toll fees from road users. The contract ends in year 5. The operator makes the following estimates: Year Contract Cost Stand-alone selling price Construction Services 1 70 Forecast cost +10% 2 80 Forecast cost +20% Operation Services Road resurfacing 3-5 25 Forecast cost +30% 4 15 Forecast cost +10% Compute the carrying amount of intangible asset at the end of year 2.
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