Intangibles: Balance Sheet Presentation and Income Statement Effects

Binson Company has provided information on intangible assets as follows:

1. A patent was purchased from Lou Company for $1,245,000 on January 1, 2018. Binson estimated the remaining useful life of the patent to be 10 years. The patent was carried in Lou's accounting records at a net book value of $1,005,000 when Lou sold it to Binson.
2. During 2019, a franchise was purchased from Rink Company for $330,000. In addition, 6% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2019 was $2,200,000. Binson estimates the useful life of the franchise to be 5 years and takes a full year's amortization in the year of purchase.
3. Binson incurred R&D costs in 2019 as follows:

   Materials and equipment	$144,000
   Personnel	178,000
   Indirect costs	58,000
   	$380,000

   Binson estimates that these costs will be recouped by December 31, 2020.
4. On January 1, 2019, Binson estimates, based on new events, that the remaining life of the patent purchased on January 1, 2018, is only 5 years from January 1, 2019.

Required:

1. Prepare a schedule showing the intangibles section of Binson's balance sheet at December 31, 2019.

Binson Company
Intangible Assets Section of Balance Sheet
December 31, 2019
Patent, net (Schedule 1)	$fill in the blank 1965670b9fcb046_1
Franchise from Rink Company, net (Schedule 2)	fill in the blank 1965670b9fcb046_2
Intangible assets	$fill in the blank 1965670b9fcb046_3
Schedule 1: Computation of Patent from Lou Company
Cost of patent at date of purchase	$fill in the blank 1965670b9fcb046_4
Amortization of patent for 2018	fill in the blank 1965670b9fcb046_5
	$fill in the blank 1965670b9fcb046_6
Amortization of patent for 2019	fill in the blank 1965670b9fcb046_7
Patent balance	$fill in the blank 1965670b9fcb046_8
Schedule 2: Computation of Franchise from Rink Company
Cost of franchise at date of purchase	$fill in the blank 1965670b9fcb046_9
Amortization of franchise for 2019	fill in the blank 1965670b9fcb046_10
Franchise balance	$fill in the blank 1965670b9fcb046_11

2. Prepare a schedule showing the income statement effects for the year ended December 31, 2019, as a result of the previously mentioned facts.

Binson Company
Income Statement Effects
For the Year Ended December 31, 2019
Patent from Lou Company:
		$fill in the blank 93478a054fce074_2
Franchise from Rink Company:
	$fill in the blank 93478a054fce074_4
	fill in the blank 93478a054fce074_6	fill in the blank 93478a054fce074_7
		fill in the blank 93478a054fce074_9
Total expenses		$fill in the blank 93478a054fce074_10