AE 2 Accounting for Intangible Assets (L02) During the current year, Red Company incurred the following expenditures, which must be recorded either as operating expenses or as intangible assets. (1) Expenditures were made for the training of new employees. The average employees remain with the company for 5 years but is trained for a new position every two years. (2) Red incurred research and development costs of $136,000 to develop a new manufacturing process. The process is expected to be patented if it is operationally feasible and the sales of the resulting products will contribute to revenue for at least 20 years, but legal life of the proposed patent is 18 years. (3) Red paid a sum of $300,000 in excess of the fair value of the net asset of a small company that it acquired. Red expects to earn above average return from the investment indefinitely. (4) Red incurred $20,000 to acquire a patent from a competitor. The patent has a remaining legal life of 10 years, but the remaining useful life is 5 years. (5) Red spent a large sum of money on sponsoring a television programme to bring awareness to the company's brand and its products. Required Explain whether each of the above expenditures should be recorded as an operating expense or an intangible asset. If you view the expenditure as an intangible asset, indicate the number of years over which the asset should be amortized, if any. Explain your reasoning. (Recap the characteristics of intangible assets to answer this question)