The following transactions involving intangible assets of Peony Corporation occu

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

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