Prepare the intangible assets section of the companys

Reference no: EM13485688

A Company entered into a franchise agreement to operate a franchised location beginning on January 1, 2014. The terms of the agreement were that the initial franchise fee was $120,000 to be paid in 5 equal annual payments of $24,000 beginning on January 1, 2014. In addition, the Company must pay the franchisor 7% of the Company's revenue from the operation of the franchise each year. The Company estimates the useful life of this franchise to be 8 years. The appropriate discount rate for the Company is 10%. The present value of the annual payments to be paid beginning on January 1,2014 is $100,077. During 2014 the Company realized revenue in the total amount of $1,080,000 from the operation of the franchise.

On January 1, 2013 the Company was granted a patent. The Company incurred a total of $59,724 in experimental and development costs. In addition, the company spent $8,960 in legal fees and other costs to register the patent. The patent is expected to have a useful life of 10 years.

The Company purchased a copyright on June 1, 2011 for a total cost of $33,000 and with an estimated useful life of 15 years. On June 1, 2014 the company successfully defended a copyright infringement law suit at a cost of $8,300.

Instructions:

A.Prepare the intangible assets section of the Company's balance sheet as of December 31, 2014. Show supporting calculations in good form.

B.In good form, prepare a schedule showing all expenses resulting from the transactions that would appear on the Company's income statement for the year ending December 31, 2014. Show supporting calculations in good form.

Reference no: EM13485688

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