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Comprehensive Information concerning Valnet Corporation's intangible assets is as follows: a. On January 1, 2019, Valnet signed an agreement to operate as a franchisee of Rapid Copy Service Inc. for an initial franchise fee of $94,000. Of this amount, $26,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $17,000 each beginning January 1, 2020. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 2, 2019, of the 4 annual payments discounted at 15% (the implicit rate for a loan of this type) is $48,500. The agreement also provides that 4% of the revenue from the franchise must be paid to the franchisor annually. Valnet's revenue from the franchise for 2019 was $920,000. Valnet estimates the useful life of the franchise to be 5 years. b. Valnet incurred $63,000 of experimental and development costs in its laboratory to develop a patent, which was granted on January 2, 2019. Legal fees and other costs associated with registration of the patent totaled $17,040. Valnet estimates that the useful life of the patent will be 8 years. c. A trademark was purchased from Walton Company for $43,000 on July 1, 2016. Expenditures for successful litigation in defense of the trademark totaling $7,900 were paid on July 1, 2019. Valnet estimates that the useful life of the trademark will be 25 years from the date of acquisition. Required: 1. Prepare a schedule showing the intangible assets section of Valnet's balance sheet at December 31, 2019. Round final answers to the nearest dollar. Valnet Corporation Intangible Assets Section of Balance Sheet December 31, 2019 Franchise from Rapid Copy Service, Inc., net (Schedule 1) 80,040 X Patent, net (Schedule 2) 17,040 X Trademark, net (Schedule 3) 7,900 X Total intangible assets 119,210 Feedback Check My Work Partially correct Schedule 1: Show supporting computations for the franchise. Computation of Franchise from Rapid Copy Service, Inc. Schedule 1 Cost of franchise at January 1, 2019 76,400 X

Comprehensive Information concerning Valnet Corporation's intangible assets is as follows: a. On January 1, 2019, Valnet signed an agreement to operate as a franchisee of Rapid Copy Service Inc. for an initial franchise fee of $94,000. Of this amount, $26,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $17,000 each beginning January 1, 2020. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 2, 2019, of the 4 annual payments discounted at 15% (the implicit rate for a loan of this type) is $48,500. The agreement also provides that 4% of the revenue from the franchise must be paid to the franchisor annually. Valnet's revenue from the franchise for 2019 was $920,000. Valnet estimates the useful life of the franchise to be 5 years. b. Valnet incurred $63,000 of experimental and development costs in its laboratory to develop a patent, which was granted on January 2, 2019. Legal fees and other costs associated with registration of the patent totaled $17,040. Valnet estimates that the useful life of the patent will be 8 years. c. A trademark was purchased from Walton Company for $43,000 on July 1, 2016. Expenditures for successful litigation in defense of the trademark totaling $7,900 were paid on July 1, 2019. Valnet estimates that the useful life of the trademark will be 25 years from the date of acquisition. Required: 1. Prepare a schedule showing the intangible assets section of Valnet's balance sheet at December 31, 2019. Round final answers to the nearest dollar. Valnet Corporation Intangible Assets Section of Balance Sheet December 31, 2019 Franchise from Rapid Copy Service, Inc., net (Schedule 1) 80,040 X Patent, net (Schedule 2) 17,040 X Trademark, net (Schedule 3) 7,900 X Total intangible assets 119,210 Feedback Check My Work Partially correct Schedule 1: Show supporting computations for the franchise. Computation of Franchise from Rapid Copy Service, Inc. Schedule 1 Cost of franchise at January 1, 2019 76,400 X

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Comprehensive Information concerning Valnet Corporation's intangible assets is as follows: a. On January 1, 2019, Valnet signed an agreement to operate as a franchisee of Rapid Copy Service Inc. for an initial franchise fee of $94,000. Of this amount, $26,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $17,000 each beginning January 1, 2020. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 2, 2019, of the 4 annual payments discounted at 15% (the implicit rate for a loan of this type) is $48,500. The agreement also provides that 4% of the revenue from the franchise must be paid to the franchisor annually. Valnet's revenue from the franchise for 2019 was $920,000. Valnet estimates the useful life of the franchise to be 5 years. b. Valnet incurred $63,000 of experimental and development costs in its laboratory to develop a patent, which was granted on January 2, 2019. Legal fees and other costs associated with registration of the patent totaled $17,040. Valnet estimates that the useful life of the patent will be 8 years. c. A trademark was purchased from Walton Company for $43,000 on July 1, 2016. Expenditures for successful litigation in defense of the trademark totaling $7,900 were paid on July 1, 2019. Valnet estimates that the useful life of the trademark will be 25 years from the date of acquisition. Required: 1. Prepare a schedule showing the intangible assets section of Valnet's balance sheet at December 31, 2019. Round final answers to the nearest dollar. Valnet Corporation Intangible Assets Section of Balance Sheet December 31, 2019 Franchise from Rapid Copy Service, Inc., net (Schedule 1) 80,040 X Patent, net (Schedule 2) 17,040 X Trademark, net (Schedule 3) 7,900 X Total intangible assets 119,210 Feedback Check My Work Partially correct Schedule 1: Show supporting computations for the franchise. Computation of Franchise from Rapid Copy Service, Inc. Schedule 1 Cost of franchise at January 1, 2019 76,400 X
Transcribed Image Text:Comprehensive Information concerning Valnet Corporation's intangible assets is as follows: a. On January 1, 2019, Valnet signed an agreement to operate as a franchisee of Rapid Copy Service Inc. for an initial franchise fee of $94,000. Of this amount, $26,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $17,000 each beginning January 1, 2020. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 2, 2019, of the 4 annual payments discounted at 15% (the implicit rate for a loan of this type) is $48,500. The agreement also provides that 4% of the revenue from the franchise must be paid to the franchisor annually. Valnet's revenue from the franchise for 2019 was $920,000. Valnet estimates the useful life of the franchise to be 5 years. b. Valnet incurred $63,000 of experimental and development costs in its laboratory to develop a patent, which was granted on January 2, 2019. Legal fees and other costs associated with registration of the patent totaled $17,040. Valnet estimates that the useful life of the patent will be 8 years. c. A trademark was purchased from Walton Company for $43,000 on July 1, 2016. Expenditures for successful litigation in defense of the trademark totaling $7,900 were paid on July 1, 2019. Valnet estimates that the useful life of the trademark will be 25 years from the date of acquisition. Required: 1. Prepare a schedule showing the intangible assets section of Valnet's balance sheet at December 31, 2019. Round final answers to the nearest dollar. Valnet Corporation Intangible Assets Section of Balance Sheet December 31, 2019 Franchise from Rapid Copy Service, Inc., net (Schedule 1) 80,040 X Patent, net (Schedule 2) 17,040 X Trademark, net (Schedule 3) 7,900 X Total intangible assets 119,210 Feedback Check My Work Partially correct Schedule 1: Show supporting computations for the franchise. Computation of Franchise from Rapid Copy Service, Inc. Schedule 1 Cost of franchise at January 1, 2019 76,400 X
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