In 2012,Sam's Salads Had the Following Expenditures Related to Developing

question 44

Essay

In 2012,Sam's Salads had the following expenditures related to developing its trademark.
During your year-end review of the accounts related to intangibles,you discover that the company has capitalized all the above as costs of the trademark.Management contends that all of the costs increase the value of the trademark; therefore,all the costs should be capitalized.
1.Which of the above costs should Sam's capitalize to the Trademark account in the balance sheet?
2.Which of the above costs should Sam's report as expense in the income statement?
$\begin{array}{lr}\text { General advertising costs } & \$ 300,000 \\\text { Advertising specifically focused on trademark development } & 120,000 \\\text { Legal fees to register trademark } & 52,000 \\\text { Registration and design fees for the trademark } & 38,000 \\\text { Legal fees for successful defense of the new trademark } & 33,000\\\text { Total }&\$543,000\end{array}$

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