Russell Enterprises acquired a franchise from Michael Incorporated for $300,000. The franchise agreement is for a period of six years. Russell uses straight-line to amortize all intangible assets. What would be the reported book value of the franchise two years after the purchase?
A) $300,000.
B) $250,000.
C) $200,000.
D) $100,000.

Question

Quizplus · Accepted Answer

$300,000 - [($300,000/6 years) × 2 years] = $200,000.

Russell Enterprises Acquired a Franchise from Michael Incorporated for $300,000