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Problem 12-2 (Part Level Submission) Information for Ayayai Corporation's intangible assets follows: On January 1, 2020, Ayayai signed an agreement to operate as a franchisee
Problem 12-2 (Part Level Submission) Information for Ayayai Corporation's intangible assets follows: On January 1, 2020, Ayayai signed an agreement to operate as a franchisee of Copy Service Inc., for an initial franchise fee of $75,000. Of this amount, $30,000 was paid when the agreement was signed and the balance is payable in four annual payments of $11,250 each, beginning January 1, 2022. 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 four annual payments discounted at 6% (the implicit rate for a loan of this type) is $38,982. The agreement also provides that 3% of the franchisee's revenue must be paid to the franchisor each year. The franchisor requires that Ayayai provide it with some form of assurance verifying the revenue amount used to determine the 3% payment. Ayayai's revenue from the franchise for 2020 was $750,000. Ayayai estimates that the franchise's useful life will be 8 years. 2. Ayayai incurred $45,000 in experimental costs in its laboratory to develop a patent, and the patent was granted on January 2, 2020. Legal fees and other costs of patent registration totalled $13,300. Ayayai estimates that the useful life of the patent will be 4 years. 3. A trademark was purchased from Shanghai Company for $28,300 on July 1, 2017. The legal costs to successfully defend the trademark totalled $8,160 and were paid on July 1, 2020. Ayayai estimates that the trademark's useful life will be 13 years from the acquisition date. Assume that Ayayai reports using ASPE. (a) Your answer partially correct. Try again. Prepare a schedule showing the intangible assets section of Ayayai's statement of financial position at December 31, 2020. (Round answers to 0 decimal places, e.g. 5,275. Enter account name only and do not provide descriptive information.) Ayayai Corporation Intangible Assets December 31, 2020 Intangible Assets-Franchis 60359 Intangible Assets-Patents 9975 Intangible Assets-Tradema 28682 x Total Intangible Assets 99016
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