Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Information concerning Flint Corporation's intangible assets is as follows. 1. On January 1, 2020, Flint signed an agreement to operate as a franchisee of Hsian

image text in transcribedimage text in transcribed

Information concerning Flint Corporation's intangible assets is as follows. 1. On January 1, 2020, Flint signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $92,500. Of this amount, $18,500 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $18,500 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020, of the 4 annual payments discounted at 11% (the implicit rate for a loan of this type) is $57,400. The agreement also provides that 6% of the revenue from the franchise must be paid to the franchisor annually. Flint's revenue from the franchise for 2020 was $930,000. Flint estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.) 2. Flint incurred $85,000 of experimental and development costs in its laboratory to develop a patent that was granted on January 2, 2020. Legal fees and other costs associated with registration of the patent totaled $22,000. Flint estimates that the useful life of the patent will be 8 years. 3. A trademark was purchased from Shanghai Company for $32,000 on July 1, 2017. Expenditures for successful litigation in defense of the trademark totaling $8,500 were paid on July 1, 2020. Flint estimates that the useful life of the trademark will be 20 years from the date of acquisition. Prepare a schedule showing the intangible assets section of Flint's balance sheet at December 31, 2020. FLINT CORPORATION Intangible Assets Prepare a schedule showing all expenses resulting from the transactions that would appear on Flint's income statement for the year ended December 31, 2020. FLINT CORPORATION Expenses Resulting from Selected Intangible Assets Transactions

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_step_2

Step: 3

blur-text-image_step3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

c. What were you expected to do when you grew up?

Answered: 1 week ago