Homework Answers
Solution:
Amount of revenue six company should recognized on sale of patent rights = Present value of annual payments to be received
= ($2,500 * Cumulative PV Factor at 9% for 4 periods) + ($4,000 * PV Factor at 9% for 5th period)
= $2,500 * 3.23972 + $4,000*0.649931
= $10,699
Hence first option is correct.
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