The terms of the arrangement require the operator to: a. Construct a road-completing construction within two years b. Maintain and operate the road for three years c. 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. d. The government grants the operator the right to collect toll fees from road users. e. The contract ends in year 5. The operator makes the following estimates: Stand-alone selling price Forecast cost +10% Forecast cost +20% Year Contract Cost Construction Services 1 70 2 80 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.

The terms of the arrangement require the operator to: a. Construct a road-completing construction within two years b. Maintain and operate the road for three years c. 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. d. The government grants the operator the right to collect toll fees from road users. e. The contract ends in year 5. The operator makes the following estimates: Stand-alone selling price Forecast cost +10% Forecast cost +20% Year Contract Cost Construction Services 1 70 2 80 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.

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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