Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Information concerning Pure Corporation's intangible assets is as follows: a. On January 1, 2019, Pure signed an agreement to operate as a franchisee of Rapid

image text in transcribed
Information concerning Pure Corporation's intangible assets is as follows: a. On January 1, 2019, Pure signed an agreement to operate as a franchisee of Rapid Copy Service Inc. for an initial franchise fee of $76,000. of this amount, $24,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $13,000 each beginning January 1, 2020. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 2, 2019, of the 4 annual payments discounted at 15% (the implicit rate for a loan of this type) is $37,100. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Pure's revenue from the franchise for 2019 was $900,000. Pure estimates the useful life of the franchise to be 5 years. b. Pure incurred $68,000 of experimental and development costs in its laboratory to develop a patent, which was granted on January 2, 2019. Legal fees and other costs associated with registration of the patent totaled $17.940. Pure estimates that the useful life of the patent will be 10 years. c. A trademark was purchased from Walton Company for $39,000 on July 1, 2016. Expenditures for successful litigation in defense of the trademark totalino $11,500 were paid on July 1, 2019. Pure estimates that the useful life of the trademark will be 20 years from the date of acquisition Information concerning Pure Corporation's intangible assets is as follows: a. On January 1, 2019, Pure signed an agreement to operate as a franchisee of Rapid Copy Service Inc. for an initial franchise fee of $76,000. of this amount, $24,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $13,000 each beginning January 1, 2020. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 2, 2019, of the 4 annual payments discounted at 15% (the implicit rate for a loan of this type) is $37,100. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Pure's revenue from the franchise for 2019 was $900,000. Pure estimates the useful life of the franchise to be 5 years. b. Pure incurred $68,000 of experimental and development costs in its laboratory to develop a patent, which was granted on January 2, 2019. Legal fees and other costs associated with registration of the patent totaled $17.940. Pure estimates that the useful life of the patent will be 10 years. c. A trademark was purchased from Walton Company for $39,000 on July 1, 2016. Expenditures for successful litigation in defense of the trademark totalino $11,500 were paid on July 1, 2019. Pure estimates that the useful life of the trademark will be 20 years from the date of acquisition

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_2

Step: 3

blur-text-image_3

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

Managerial Accounting, 1, (6 Months)

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

14th Edition

1337270814, 9781337270816

More Books

Students also viewed these Accounting questions

Question

Draw a decision table for the reimbursement policy in Problem 1.

Answered: 1 week ago

Question

Sketch and label the hierarchy of needs.

Answered: 1 week ago