Sheridan Company has provided information on intangible assets as follows.

A patent was purchased from Skysong Company for $$1,750,000$ on January $1,2024.$ Sheridan estimated the remaining useful life of

the patent to be $10$ years. The patent was carried in Skysong's accounting records at a net book value of $$1,750,000$ when Skysong

sold it to Sheridan.

During $2025,$ a franchise was purchased from Grouper Company for $$530,000.$ In addition, $5\%$ of revenue from the franchise must be

paid to Grouper. Revenue from the franchise for $2025$ was $$2,520,000.$ Sheridan estimates the useful life of the franchise to be IO

years and takes a full year's amortization in the year of purchase.

Sheridan incurred research and development costs in $2025$ as follows.

Materials and equipment

Personnel

Indirect costs

$$157,000$

$189,000$

$105,000$

$$451,000$

Sheridan estimates that these costs will be recouped by December $31,2028.$ The materials and equipment purchased have no

alternative uses.

On January $1,2025,$ because of recent events in the field, Sheridan estimates that the remaining life of the patent purchased on

January $1,2024,$ is only $5$ years from January I, $2025.$ Sheridan Company has provided information on intangible assets as follows.

A patent was purchased from Skysong Company for $$1,750,000$ on January $1,2024.$ Sheridan estimated the remaining useful life of

the patent to be $10$ years. The patent was carried in Skysong's accounting records at a net book value of $$1,750,000$ when Skysong

sold it to Sheridan.

During $2025,$ a franchise was purchased from Grouper Company for $$530,000.$ In addition, $5\%$ of revenue from the franchise must be

paid to Grouper. Revenue from the franchise for $2025$ was $$2,520,000.$ Sheridan estimates the useful life of the franchise to be $10$

years and takes a full year's amortization in the year of purchase.

Sheridan incurred research and development costs in $2025$ as follows.

Sheridan estimates that these costs will be recouped by December $31,2028.$ The materials and equipment purchased have no

alternative uses.

On January $1,2025,$ because of recent events in the field, Sheridan estimates that the remaining life of the patent purchased on

January $1,2024,$ is only $5$ years from January $1,2025.$ Your answer is correct.

Prepare a schedule showing the intangibles section of Sheridan's balance sheet at December $31,2025.($Enter account name only

and do not provide descriptive information.$)$

SHERIDAN COMPANY

Intangibles Section of Balance Sheet

December $31,2025$

Intangible Assets

Patents

$

Franchises Your answer is partially correct.

Prepare a schedule showing the income statement effect $($related to expenses$)$ for the year ended December $31,2025,$ as a result

of the facts above. $($Enter account name only and do not provide descriptive information.$)$

SHERIDAN COMPANY

Income Statement Effect

For the Year Ended December $31,2025$

Patent from Skysong Company

Amortization of Patent

Payment to Grouper Company

Amortization of Franchise

$

Research and Development Costs

Franchise from Grouper Company

Total Charged against Income