Costs associated with various intangibles of a company may either be expensed when incurred or capitalized and amortized. Indicate how each of the following costs should be recorded.Options: - Charged to franchise account and amortized- Charged to patent account and amortized- Charged to appropriate asset accounts and amortized - Charged to expense when incurred 1.Initial fee to acquire a franchise 2.Design, construction, and testing of preproduction prototypes and models 3.Legal costs incurred in connection with a successful patent application 4.Laboratory research aimed at discovery of new knowledge 5.Cost of purchased equipment that will be used in a series of R&D projects over a ten-year period 6.Legal costs of the initial incorporation of a business 7.Cost of a long-term lease of land containing mineral deposits 8.Annual service fee paid to the franchiser's headquarters for administrative services rendered to the franchisee

Intangible assets are the asset of the company that cannot be touched or felt but these assets are…

Answered: Costs associated with various…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Costs associated with various intangibles of a company may either be expensed when incurred or capitalized and amortized. Indicate how each of the following costs should be recorded.

Options:

- Charged to franchise account and amortized

- Charged to patent account and amortized

- Charged to appropriate asset accounts and amortized

- Charged to expense when incurred

1.	Initial fee to acquire a franchise
2.	Design, construction, and testing of preproduction prototypes and models
3.	Legal costs incurred in connection with a successful patent application
4.	Laboratory research aimed at discovery of new knowledge
5.	Cost of purchased equipment that will be used in a series of R&D projects over a ten-year period
6.	Legal costs of the initial incorporation of a business
7.	Cost of a long-term lease of land containing mineral deposits
8.	Annual service fee paid to the franchiser's headquarters for administrative services rendered to the franchisee

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