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

question 84

Essay

In 2012, Sam's Salads had the following expenditures related to developing its trademark. $\begin{array}{lr}\text { General advertising costs } & \$ 300,000 \\\text { Advertising specifically focused on trademark development } & 120,000 \\\text { Legal fees to register trademark } & 52,000 \\\text { Registration and design fees for the trademark } & 38,000 \\\text { Legal fees for successful defense of the new trademark } & 33,000\\\text { Total }&\$543,000\end{array}$ 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?

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Definitions:

Tracking Reports

Reports used to monitor and analyze the progress, performance, or location of specific items, activities, or campaigns over time.

Strategic Initiatives

Broadly, these are critical plans or actions that are designed to achieve major goals or overalls in an organization's strategy.

Marketing Executives

Professionals responsible for developing and overseeing marketing strategies to promote products, services, or brands.

Innovation

The creation, development, and implementation of new products, services, or processes that improve efficiency, effectiveness, or competitive advantage.