Traveling Inc manages and operates toll roads all over the country. The company purchased a license to operate a toll road seventeen years ago for an amount of $20million. It was expected that the toll road would be in use for twenty years and the economic benefits would flow to Motorway evenly over the twenty-year period. The estimated toll road usage is 1 million cars per year. At the time there were no plans to construct alternate routes in the area. There is no active market for toll road licenses. During the current year, the government announced plans, and construction began on a bridge in the area that would significantly reduce the usage of the toll road. The management estimated that the economic benefits flowing to the entity would decrease each year over the remaining three years. The estimated toll road usage is expected to drop to 900,000 cars, 600,000 cars, and 300,000 cars respectively, over the remaining three years of the license. The right to operate the toll road was correctly recognized in intangible assets upon purchase seventeen years ago. Discuss the accounting issues relating to the measurement of the license for the toll road over its useful economic life

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Answer Since the company has purchased the license for 20M for 20 years it is the ... View the full answer