Reference no: EM132654581

Rechilda 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:

Marketing research to study consumer tastes 400,000
Design cost of trademark 1,500,000
Legal fee of registering trademark 150,000
Advertising to establish recognition of trademark 200,000
Registration fee with Intellectual Property Office 50,000

Problem 1: Through renewals, the trademark is expected to have an unlimited life. What is the cost to be capitalized as trademark?

a.1,700,000
b. 1,900,000
c. 2,300,000
d. 2,100,000