On Jan. 2, 2012, Rave Company developed a trademark to distinguish its products from those of its
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Question:
The similarity between the trademark cost and other intangible and operating costs has caused some confusion over proper accounting. The following items are being treated as part of the cost of the trademark:
Marketing research to study consumer tastes 400, 000Legal fee of registering trademark 150, 000Advertising to establish recognition of trademark 200, 000Registration fee with Intellectual Property Office 50, 000Through renewals, the trademark is expected to have an unlimited life. It has a remaining life of 7 years but renewable every 10 years at minimal cost. Due to the action of competitor, as of Dec. 31, 2012 the trademark is found to be impaired. It has determined that the value in use amounted to 100, 000 and the net selling price is 150, 000
Requirement:
a. How much is the cost to be capitalized to trademark?
b. How much is the amortization for 2012?
c. Carrying value on Dec. 31, 2012?
d. How much is the impairment loss?
e. Entry for 2012.
Related Book For
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
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