The following transactions involving intangible assets of Peony Corporation occu
ID: 2579484 • Letter: T
Question
The following transactions involving intangible assets of Peony Corporation occurred on or near December 31, 20X4. (a) Peony paid Floral Company $200,000 for the exclusive right to market a particular product, using the Floral name and logo in promotional material. The franchise runs for as long as (b) Peony spent $300,000 developing a new manufacturing process. It has applied for a patent, (c) |In January, 20x5, Peony's application for a patent in (b) above was granted. Legal and Peony is in business and it believes that its application will be successful registration costs incurred were $50,000. The patent runs for 20 years. The manufacturing (d) Peony incurred $80,000 in successfully defending one of its patents in an infringement suit. (e) Peony incurred $200,000 in an unsuccessful patent defense. As a result of the adverse process will be useful to Peony for 10 years. The patent expires during December, 20X8. verdict, the patent, with a remaining unamortized cost of $105,000, is deemed worthless () Peony paid Seed Laboratories $52,000 for research and development work performed by Seed under contract for Peony. The benefits are expected to last six years.Explanation / Answer
On Date of Transaction On December 31, 2015 1 Franchises 200000 Not Needed Cash 200000 2 Research and Development Expense 300000 Not Needed Cash 300000 3 Patents 50000 Amortization Expense 5000 Cash 50000 Patents 5000 4 Patents 80000 Amortization Expense 20000 Cash 80000 Patents 20000 Legal Expenses 200000 Not Needed Cash 200000 Patent Expense 105000 Patents 105000 Research and Development Expense 52000 Not Needed Cash 52000