Exercise 12-10 Sage Hil Industries has the following patents on its December 31, 2016, balance sheet. Date Acquired Initial Cost $41,616 $15,480 $16,320 Useful Life at Date Acquired 17 years 10 years 4 years Patent Item Patent A Patent B Patent C The following events occurred during the year ended December 31, 2017 1. Research and development costs of $234,000 were incurred during the year 2. Patent D was purchased on July 1 for $47,196. This patent has a useful life of 91/2 years 3. As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B's value may have occurred at December 31, 2017. The controller for Sage Hill estimates the expected future cash flows from Patent B will be as follows Year 2018 2019 2020 Expected Future Cash Flows $2,000 2,000 2,000 The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year)