1. The CMS Co. began operations in January 2019. Listed below are selected transactions for 2019 and 2020:

   • In 2019, $125,000 in R&D expenditures were made to develop a new product that was patented on July 1, 2019. CMS believes the patent will provide benefits for ten years. Legal fees incurred on July 1, 2019, were $24,000.
   • On September 1, 2019, CMS paid EZ Company $180,000 for its patent on a successful product. The patent has six remaining years in its legal life.
   • On October 1, 2019, CMS applied for and received a trading name from the government. The legal costs associated with filing for the trade name were $10,000. In addition, in November 2019, the company incurred $50,000 in advertising its name. Benefits are expected indefinitely.
   • In early January 2020, CMS paid $20,000 in legal fees to defend the patent acquired from EZ. CMS's attorneys were successful in the lawsuit.
   • In 2020, R&D expenditures of $90,000 were incurred in the development of a product. A patent was received on December 1, 2020. Legal fees paid in connection with the patent were $15,000. The economic life of the product is expected to be five years.

   Question Content Area

   Required:
   a1. Determine the book value as of December 31, 2020 for each intangible asset. The company amortizes its intangible assets using the straight-line method and recognizes amortization to the nearest month.

   Patent on product developed in 2019	$fill in the blank 108d1e036fc5061_1
   Patent purchased from EZ Company	$fill in the blank 108d1e036fc5061_2
   Trade name	$fill in the blank 108d1e036fc5061_3
   Patent on product developed in 2020	$fill in the blank 108d1e036fc5061_4

   Question Content Area

   a2. Prepare a partial balance sheet for CMS Company as of December 31, 2020, showing the intangible assets.

   CMS Company Partial Balance Sheet December 31, 2020
   Intangible assets:
   2019 amortization Book value of patentLegal fees, 2020Noncompete agreementPatents	$fill in the blank 0e095bf4c02dfb1_2
   2019 amortization Book value of patentLegal fees, 2020Noncompete agreementTrade name	fill in the blank 0e095bf4c02dfb1_4
   Total intangible assets	$fill in the blank 0e095bf4c02dfb1_5

   Question Content Area

   b. Prepare a schedule to calculate CMS's expenses related to the above transactions for both 2019 and 2020. Enter all amounts as positive numbers.

   	2019 Expense
   Cost of trademarkLegal feesLoss on ImpairmentR and D expenseTrademark	$fill in the blank dc257a07a076043_2
   Amortization expense-Patents Cost of trademarkLegal feesLoss on ImpairmentTrademark	fill in the blank dc257a07a076043_4
   Advertising expenseCost of trademarkLegal feesLoss on ImpairmentTrademark	fill in the blank dc257a07a076043_6
   Total expenses	$fill in the blank dc257a07a076043_7
   	2020 Expense
   Cost of trademarkLegal feesLoss on ImpairmentR and D expenseTrademark	$fill in the blank dc257a07a076043_9
   Amortization expense-Patents Cost of trademarkLegal feesLoss on ImpairmentTrademark	fill in the blank dc257a07a076043_11
   Total expenses	$fill in the blank dc257a07a076043_12

Answer rating: 100% (QA)

a1 To determine the book value as of December 31 2020 for each intangible asset we need to consider the relevant information provided Patent on product developed in 2019 The patent was acquired on Jul... View the full answer