Information concerning Taylor Corporation’s intangible assets follows: 1. Taylor incurred $70,000 of experimental and development costs in its laboratory to develop a patent which was granted on January 2, 2025. Legal fees associated with the registration of the patent totaled $20,000. Taylor estimates that the useful life of the patent will be 10 years; the legal life of the patent is 20 years. The company uses the straight-line method of amortization for this asset. 2. On January 1, 2025, Taylor signed an agreement to operate as a franchisee of Dairy King, Inc. for an initial franchise fee of $150,000. The agreement provides that the fee is not refundable and no future services are required of the franchisor. Taylor estimates the useful life of the franchise to be 15 years and uses the straight-line method of amortization. 3. A trade name was purchased from Stine Company for $80,000 on May 1, 2023. Expenditures for successful litigation in defense of the trade name totaling $18,000 were paid on June 1, 2025. Taylor estimates that the trade name will have an indefinite life. Describe the intangible assets that would be reported on Taylor’s balance sheet at December 31, 2025. Provide a description of the amount at which each intangible asset would be reported, and how the amount is calculated.
Information concerning Taylor Corporation’s intangible assets follows:
1. Taylor incurred $70,000 of experimental and development costs in its laboratory to develop a patent which was granted on January 2, 2025. Legal fees associated with the registration of the patent totaled $20,000. Taylor estimates that the useful life of the patent will be 10 years; the legal life of the patent is 20 years. The company uses the straight-line method of amortization for this asset.
2. On January 1, 2025, Taylor signed an agreement to operate as a franchisee of Dairy King, Inc. for an initial franchise fee of $150,000. The agreement provides that the fee is not refundable and no future services are required of the franchisor. Taylor estimates the useful life of the franchise to be 15 years and uses the straight-line method of amortization.
3. A trade name was purchased from Stine Company for $80,000 on May 1, 2023. Expenditures for successful litigation in defense of the trade name totaling $18,000 were paid on June 1, 2025. Taylor estimates that the trade name will have an indefinite life.
Describe the intangible assets that would be reported on Taylor’s
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