Exercise 12-10 Tones Industries has the following patents on its December 31, 2016, balance sheet. Initial Cost $30,600 $15,000 $14,400 Date Acquired Useful Life at Date Acquired 17 years 10 years 4 years Patent m3/1/13 Item Patent A Patent B Patent C The following events occurred during the year ended December 31, 2017 1. Research and development costs of $245,700 were incurred during the year 2. Patent D was purchased on July 1 for $36,480. This patent has a useful life of 9/2 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 Tones 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.)