Comprehensive

Information concerning Valnet Corporation's intangible assets is as follows:

On January $1,2019,$ Valnet signed an agreement to operate as a franchisee of Rapid Copy Service Inc. for an initial franchise fee of $$101,000.$ Of this amount, $$21,000$ was paid when the agreement was signed, and the balance is payable in $4$ annual payments of $$20,000$ each beginning January $1,2020.$ The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January $2,2019,$ of the $4$ annual payments discounted at $10\%($the implicit rate for a loan of this type$)$ is $$63,400.$ The agreement also provides that $5\%$ of the revenue from the franchise must be paid to the franchisor annually. Valnet's revenue from the franchise for $2019$ was $$940,000.$ Valnet estimates the useful life of the franchise to be $5$ years.

Valnet incurred $$76,000$ of experimental and development costs in its laboratory to develop a patent, which was granted on January $2,2019.$ Legal fees and other costs associated with registration of the patent totaled $$16,240.$ Valnet estimates that the useful life of the patent will be $8$ years.

A trademark was purchased from Walton Company for $$31,000$ on July $1,2016.$ Expenditures for successful litigation in defense of the trademark totaling $$11,400$ were paid on July $1,2019.$ Valnet estimates that the useful life of the trademark will be $25$ years from the date of acquisition.

Required:

Question Content Area

$1.$ Prepare a schedule showing the intangible assets section of Valnet's balance sheet at December $31,2019.$ Round final answers to the nearest dollar.

Valnet Corporation

Intangible Assets Section of Balance Sheet

December $31,2019$

Franchise from Rapid Copy Service, Inc., net $($Schedule $1)$ $fill in the blank d$347$f$209$d$01201$b$\_1$

Patent, net $($Schedule $2)$ fill in the blank d$347$f$209$d$01201$b$\_2$

Trademark, net $($Schedule $3)$ fill in the blank d$347$f$209$d$01201$b$\_3$

Total intangible assets $fill in the blank d$347$f$209$d$01201$b$\_4$

Question Content Area

Schedule $1$: Show supporting computations for the franchise.

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Computation of Franchise from Rapid Copy Service, Inc.

Schedule $1$

Cost of franchise at January $1,2019$ $fill in the blank $1$e$2$ec$6083$ffc$07$b$\_1$

Amortization of franchise for $2019$ fill in the blank $1$e$2$ec$6083$ffc$07$b$\_2$

Franchise balance, December $31,2019$ $fill in the blank $1$e$2$ec$6083$ffc$07$b$\_3$

Question Content Area

Schedule $2$: Show supporting computations for the patent.

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Computation of Patent

Schedule $2$

Capitalized cost of patent at January $2,2019$ $fill in the blank $18$e$692$f$46034$fd$0\_1$

Amortization of patent for $2019$ fill in the blank $18$e$692$f$46034$fd$0\_2$

Patent balance, December $31,2019$ $fill in the blank $18$e$692$f$46034$fd$0\_3$

Question Content Area

Schedule $3$: Show supporting computations for the trademark. Round computations and final answers to the nearest dollar.

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Computation of Trademark

Schedule $3$

Cost of trademark at July $1,2016$ $fill in the blank be$1840042$fb$8$f$91\_1$

Amortization through December $31,2018$ fill in the blank be$1840042$fb$8$f$91\_2$

Amortization for period January $1-$ June $30,2019$ fill i

Cost of successful litigation in defense of trademark, July $1,2019$ fill in the blank be$1840042$fb$8$f$91\_4$

Balance, July $1,2019$ $fill in the blank be$1840042$fb$8$f$91\_5$

Amortization for period July $1-$ December $31,2019$ fill in the blank be$1840042$fb$8$f$91\_6$

Balance, December $31,2019$ $fill in the blank be$1840042$fb$8$f$91\_7$

Question Content Area

$2.$ Prepare a schedule showing all expenses resulting from the transactions that would appear on Valnet's income statement for the year ended December $31,2019.$ Enter all amounts as positive numbers.

Valnet Corporation

Expenses Resulting from Intangibles Transactions

For the Year Ended December $31,2019$

Franchise from Rapid Copy Service, Inc.

Amortization of franchise $($Schedule $1)$ $fill in the blank $36$ad$25$fc$102$b$028\_1$

Franchise fee on revenues from operations fill in the blank $36$ad$25$fc$102$b$028\_2$

Imputed interest expense on unpaid balance of initial franchise fee fill in the blank $36$ad$25$fc$102$b$028\_3$

Total franchise expenses $fill in the blank $36$ad$25$fc$102$b$028\_4$

Amortization of patent $($Schedule $2)$ fill in the blank $36$ad$25$fc$102$b$028\_5$

Amortization of trademark $($from Schedule $3)$ fill in the blank $36$ad$25$fc$102$b$028\_6$

Total expenses $fill in the blank $36$ad$25$fc$102$b$028\_7$

Check My WorkComprehensive

Information concerning Valnet Corporation's intangible assets is as follows:

a$.$ On January $1,2019,$ Valnet signed an agreement to operate as a franchisee of Rapid Copy Service Inc. for an initial franchise fee of $$101,000.$ Of this

amount, $$21,000$ was paid when the agreement was signed, and the balance is payable in $4$ annual payments of $$20,000$ each beginning January $1,$

The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at

January $2,2019,$ of th