Han Company has provided information on intangible assets as follows:

1. A patent was purchased from Lou Company for $1,140,000 on January 1, Year 1. Han estimated the remaining useful life of the patent to be 15 years. The patent was carried in Lou's accounting records at a net book value of $740,000 when Lou sold it to Han.
2. During Year 2, a franchise was purchased from Rink Company for $500,000. In addition, 5% of revenue from the franchise must be paid to Rink. Revenue from the franchise for Year 2 was $2,400,000. Han estimates the useful life of the franchise to be 10 years and takes a full year's amortization in the year of purchase.
3. Han incurred R&D costs in Year 2 as follows:

Materials and equipment	$116,000
Personnel	149,000
Indirect costs	76,000
	$341,000

1. Han estimates that these costs will be recouped by December 31, Year 3.
2. On January 1, Year 2, Han estimates, based on new events, that the remaining life of the patent purchased on January 1, Year 1, is only 10 years from January 1, Year 2.

1. Prepare a schedule showing the intangibles section of Han's balance sheet at December 31 , Year 2. Schedule 2: Computation of Franchise from Rink Company