Information concerning Pronghorn Corporations intangible assets is as follows.

1.		On January 1, 2020, Pronghorn signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $50,000. Of this amount, $10,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $10,000 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 10% (the implicit rate for a loan of this type) is $31,700. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Pronghorns revenue from the franchise for 2020 was $920,000. Pronghorn 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.		Pronghorn incurred $65,000 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 $19,200. Pronghorn 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. Pronghorn estimates that the useful life of the trademark will be 20 years from the date of acquisition.

Partially correct answer iconYour answer is partially correct.

Prepare a schedule showing the intangible assets section of Pronghorns balance sheet at December 31, 2020.

PRONGHORN CORPORATION Intangible Assets choose the accounting period December 31, 2020For the Year Ended December 31, 2020For the Month Ended December 31, 2020
select a balance sheet item Trademark AmortizationFranchise AmortizationPatentTrademarkResearch and Development CostsTotal Intangible AssetsLegal FeesFranchise FeeFranchisePatent Amortization		$enter a dollar amount
select a balance sheet item Franchise FeeTrademark AmortizationPatent AmortizationTotal Intangible AssetsResearch and Development CostsPatentTrademarkFranchise AmortizationLegal FeesFranchise		enter a dollar amount
select a balance sheet item Legal FeesFranchise AmortizationFranchise FeeTotal Intangible AssetsPatent AmortizationTrademarkResearch and Development CostsPatentTrademark AmortizationFranchise		enter a dollar amount
select a closing section name Franchise FeeTrademark AmortizationTotal Intangible AssetsLegal FeesResearch and Development CostsFranchise AmortizationPatent AmortizationPatentFranchiseTrademark		$enter a total amount for this section

eTextbook and Media

Partially correct answer iconYour answer is partially correct.

Prepare a schedule showing all expenses resulting from the transactions that would appear on Pronghorns income statement for the year ended December 31, 2020.

PRONGHORN CORPORATION Expenses Resulting from Selected Intangible Assets Transactions choose the accounting period December 31, 2020For the Year Ended December 31, 2020For the Month Ended December 31, 2020
select a balance sheet item Trademark AmortizationFranchise AmortizationTotal Intangible AssetsLegal FeesPatentTrademarkInterest ExpenseResearch and Development CostsPatent AmortizationFranchise FeeFranchise		$enter a dollar amount
select a balance sheet item Patent AmortizationFranchise FeeLegal FeesFranchiseTrademarkInterest ExpenseTotal Intangible AssetsFranchise AmortizationPatentTrademark AmortizationResearch and Development Costs		enter a dollar amount
select a balance sheet item Legal FeesTrademarkResearch and Development CostsPatent AmortizationPatentTrademark AmortizationFranchiseTotal Intangible AssetsFranchise FeeInterest ExpenseFranchise Amortization		enter a dollar amount
select a balance sheet item Franchise AmortizationTrademarkInterest ExpenseFranchise FeeLegal FeesTotal Intangible AssetsPatent AmortizationTrademark AmortizationPatentFranchiseResearch and Development Costs		enter a dollar amount
select a balance sheet item Trademark AmortizationFranchise FeeFranchiseTrademarkLegal FeesPatentFranchise AmortizationInterest ExpensePatent AmortizationResearch and Development CostsTotal Intangible Assets		enter a dollar amount
select a closing section name Franchise FeePatentResearch and Development CostsTrademark AmortizationTotal Intangible AssetsFranchise AmortizationLegal FeesFranchiseTrademarkInterest ExpensePatent Amortization		$enter a total amount for this section