Problem 12 03 Information concerning Blue Corporations intangible assets is as follows 1 On January 1, 2020, Blue signed an agreement to operate as a franchisee of Hsian Copy Service, Inc for an initial franchise fee of $57,500 Of this amount, $11,500 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $11,500 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 10 (the implicit rate for a loan of this type) is $36,450 The agreement also provides that 5 of the revenue from the franchise must be paid to the franchisor annually Blues revenue from the franchise for 2020 was $840,000 Blue 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 Blue incurred $90,000 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 Blue estimates that the useful life of the patent will be 8 years 3 A trademark was purchased from Shanghai Company for $38,000 on July 1, 2017 Expenditures for successful litigation in defense of the trademark totaling $8,500 were paid on July 1, 2020 Blue estimates that the useful life of the trademark will be 20 years from the date of acquisition Z Your answer is partially correct Try again Prepare a schedule showing the intangible assets section of Blue's balance sheet at December 31, 2020 BLUE CORPORATION Intangible Assets December 31, 2020 S43155 Franchise TPatent 3840 Tfrademark 45133 fotal Intangible Assets 92128 Z Your answer is partially correct Try again Prepare a schedule showing all expenses resulting from the transactions that would appear on Blue's income statement for the year ended December 31, 2020 BLUE CORPORATION Expenses Resulting from Selected Intangible Assets Transactions For the Year Ended December 31, 2020 TInterest Expense 33645 Franchise Fee 142000 TFranchise Amortization 43155 Patent Amortization 3840 Tfrademark Amortization 2317 194957 Total Intangible Assets

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Problem 12-03 Information concerning Blue Corporations intangible assets is as follows. 1. On January 1, 2020, Blue signed an agreement to operate as a franchisee

Problem 12-03

Information concerning Blue Corporations intangible assets is as follows.

1.		On January 1, 2020, Blue signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $57,500. Of this amount, $11,500 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $11,500 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 10% (the implicit rate for a loan of this type) is $36,450. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Blues revenue from the franchise for 2020 was $840,000. Blue 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.		Blue incurred $90,000 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. Blue estimates that the useful life of the patent will be 8 years.
3.		A trademark was purchased from Shanghai Company for $38,000 on July 1, 2017. Expenditures for successful litigation in defense of the trademark totaling $8,500 were paid on July 1, 2020. Blue estimates that the useful life of the trademark will be 20 years from the date of acquisition.

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Z Your answer is partially correct. Try again. Prepare a schedule showing the intangible assets section of Blue's balance sheet at December 31, 2020. BLUE CORPORATION Intangible Assets December 31, 2020 S43155 Franchise TPatent 3840 Tfrademark [45133 fotal Intangible Assets 92128 Z Your answer is partially correct. Try again. Prepare a schedule showing all expenses resulting from the transactions that would appear on Blue's income statement for the year ended December 31, 2020. BLUE CORPORATION Expenses Resulting from Selected Intangible Assets Transactions For the Year Ended December 31, 2020 TInterest Expense 33645 Franchise Fee 142000 TFranchise Amortization [43155 Patent Amortization 3840 Tfrademark Amortization 2317 194957 [Total Intangible Assets