On January 1, 2015,LaginaCompany purchased Blankenship, Inc. by paying $2,300,000. At December 31, 2014, the balance sheet of Blankenship, Inc. was as follows:

Cash	$ 150,000	Accounts payable	$ 30,000
Inventory	40,000	Notes payable	400,000
Land	700,000	Common Stock	1,500,000
Buildings (net)	200,000	Retained Earnings	20,000
Equipment (net)	750,000
Franchise (net)	100,000
Patent (net)	10,000
Total assets	$ 1,950,000	Total liabilities and equity	$ 1,950,000

All fair valuesare equal to their book values with the following exceptions:

Land fair value of $800,000

Buildings fair value of $300,000

Equipment fair value of $700,000

Franchise fair value of $200,000

Patent fairvalue of $400,000

Thefranchise expires on December 31, 2017 and thepatents have a remaininglegal life of 6 years with an estimated useful life of 4 years.

On July1, 2015,Laginapaid $20,000 to successfully defend its patent.

During 2015,Laginaincurred $800,000 of experimental and development costs to develop a new drilling methodology.In 2016, legal fees and other costs associated with registration of the related patent totaled $18,000.A patent for this technology was granted on March 31, 2016. The patent has a legal and estimated useful life of 7 years.

Due to a change in the local regulatory climate, at the end of 2015, after recording amortization,Laginadetermined it was necessary to assess impairment on the franchise. At December 31, expected future cash flows are $150,000 and estimated fair value is $130,000.

On April 1, 2016,Laginasold the patent acquired in 2015 in exchange for $300,000 cash.

At the end of 2015,Laginadetermined that there was no goodwill impairment. As part of year-end testing in 2016,Laginacollected the following information (as of December 31):

Book value of net assets (including goodwill)	$550,000
Estimated net future cash flows	$800,000
Fair value of net assets (including goodwill)	$525,000
Fair value of net assets (excluding goodwill)	$475,000

Requirements:

Compute the book valuefor each of the above mentioned intangible assets at December 31, 2015 and 2016.

Compute the income statement effects for 2015 and 2016 for each of the above mentioned transactions.

**Round all computations to the nearest whole dollar.

Note:

You may not need to use all titles provided below

All computations should be shown on the two pages that follow

Item	2015 Book Value	2016 Book Value
Franchise	$	$
Patent	$	$
Goodwill	$	$

Item	2015 Income Statement Effect	2016 Income Statement Effect
Amortization Expense - Franchise	$	$
Amortization Expense - Patent	$	$
Amortization Expense - Goodwill	$	$
Impairment Loss Franchise	$	$
Impairment Loss Goodwill	$	$
Research and Development Expense	$	$
Legal Fees Expense	$	$
Gain on Sale	$	$
Loss on Sale	$	$

Computations 2015

Item	Book Value	Income Statement Effect
Franchise
Patents
Goodwill

Computations 2016

Item	Book Value	Income Statement Effect
Franchise
Patents
Goodwill