Reference no: EM132586529

On January 1, 2019, Zephaniah Company developed a trademark to distinguish its products from those of its competitors. Through advertising and other means, the company is seeking to establish significant product identification to increase future sales. The similarity between the trademark costs and other intangible and operating costs has caused some confusion over proper accounting.

The following items are being treated as part of the cost of the trademark:

Registration fee and other directly attributable costs       75,000

Marketing research to study consumer tastes               600,000

Design costs of trademark                                     2,250,000

Legal fees of registering trademark                           225,000

Advertising to establish recognition of trademark        300,000

Question 1: Through renewals, the trademark is expected to have an unlimited life. In Zephaniah's December 31, 2019 balance sheet, what amount should be reported as trademark?