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Accounting for franchise patents and trade name

Information concerning Haerhpin Corporation's intangibles is as follows:

1: On January 1, 2004, Haerhpin signed an agreement to operate as a franchisee of Hsian copy services Inc. for initial franchise fees of #75,000. Of this amount, $15,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $15,000 each beginning January 1, 2005. The agreement provides that the down payment is not refundable and no future services are required for the franchisor.

Look at the attached file for remaining part of the problem.

Required: Schedule showing the intangible section of balance sheer at Dec 31, 2004 and schedule showing all expenses resulting from the transactions that would appear on income statement

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Solution Preview

See the attached file for complete solution. The text here may not be copied exactly as some of the symbols / tables may not print. Thanks

Haerhpin Corporation
Intangible Assets
December 31, 2004
Franchise, net of accumulated amortization of $5,870 (Schedule 1) $52,830
Patent, net of accumulated ...

Solution Summary

The solution provides systematic accounting process for franchise arrangements, patents and trade name. Complete schedules and calculations are shown for the reader to increase the effectiveness of their learning.