Problem 12-3 Information concerning Blue Corporation's intangible assets is as follows 1. On January 1, 2017, Blue signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $85,000. Of this amount, $17,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $17,000 each, beginning January 1, 2018. 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, 2017, of the 4 annual payments discounted at 1 5% (the implicit rate for a loan of this type) is $48,540. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Blue's revenue from the franchise for 2017 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, 2017. 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. A trademark was purchased from Shanghai Company for $38,000 on July 1, 2014 Expenditures for successful litigation in defense of the trademark totaling $15,300 were paid on July 1, 2017. Blue estimates that the useful life of the trademark will be 20 years from the date of acquisition. 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, 2017. (Round all answers to O decimal places, e.g. 8,564.) BLUE CORPORATION Expenses Resulting from Selected Intangible Assets Transactions For the Year Ended December 31, 2017 Interest Expense 7281 Franchise Amortization 6554 Franchise Fee 42000 Patent Amortization 2400 Trademark Amortization 3300 61535 Total Intangible Assets