Suddenly Salad had the following expenditures related to developing its trademark. General advertising costs $ 370,000 Advertising specifically focused on trademark development 111,000 Legal fees to register trademark 55,700 Registration and design fees for the trademark 34,900 Legal fees for successful defense of the new trademark 31,400 Total $ 603,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the trademark. Management contends that all of the costs increase the value of the trademark; therefore, all the costs should be capitalized.

1. Which of the above costs should the company capitalize to the Trademark account in the balance sheet?

2. Which of the above costs should the company report as expense in the income statement?