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SANDHILL COMPANY Income Statement Effect For the Year Ended December 31, 2017Your answer is incorrect. Try again. Prepare the intangibles section of Sandhills balance sheet at December 31, 2017. (Enter account name only and do not provide descriptive information.) SANDHILL COMPANY Intangibles Section of Balance Sheet December 31, 2017 Current Assets Amortisation in year 2016Exercise 12-8 Sandhill Company has provided information on intangible assets as follows A patent was purchased from Ford Company for $2,555,000 on January 1, 2016. Sandhill estimated the remaining useful life of the patent to be 10 years, The patent was carried in Fords accounting records at a net book value of $2,036,000 when Ford sold it to During 2017, a franchise was purchased from Polo Company for $532,000. In addition In the franchise must be pald 7% of revenue from to Polo Revenue from the franchise for 2017 as 2 690,000. Sandhill estimates t he useful life of the franchise to be 10 years and takes a full years amortization in the year of purchase. Sandhill inourred research and development costs in 2017 as follows. Materials and equipment Personnel Indirect costs n in the year of purchasfor $138,400 199,700 104,100 Sandhill rstimates that these casts will be recnuped by December 31, 2020. The materials and equipment purchased have no alternative uses. On January 1, 2017, because of recent events in the field, Sandhill estimates that the remaining lite of the patent purchased on January 1, 2016, is only 5 years from January 1, 2017.

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SANDHILL COMPANY Income Statement Effect For the Year Ended December 31, 2017 Patent from Ford Company Amortization of Patent for 2017[Refer working note 1] $459.900 Franchise From Polo Company: $532,000 [ 10 ye ars Amortization of Franchise for 2017 $53,200 Payment to Polo Company [$2,690,000 x 7%) 188,300 $241,500 Research and development Costs 432,200 Total charged against income S1,133,600 SANDHILL COMPANY Intangible Section of Balance S heet December 31,2017 Intangible Assets Patents [Refer Working Note 1 below] $1,839,600 Franchises [Refer Working Note 2 below] $478,800 Total Intangible Assets $2,318,400Working Note 1 - Computation of Book Value of Patent as of December 31, 2017 Purchase cost of Patent from Ford Company $2,555,000 $2,555,000 10 ye ars Less: Amortization of Patent cost for 2016 $255,500 Patent book value as on January 1, 2017 $2,299,500 $2,299,500 Less: Amortization of Patent cost for 2017 $459,900 5 ye ars Book value of Patent as of December 31,2017 $1,839,600 Note: From the January 1,2017, the remaining life of the patent is only 5 years Working Note 2- Computation of Book Value of Franchise as of December 31, 2017 Purchase cost of Franchise from Polo Company $532,000 $532,000 Less: Amortization of franchise cost for 2017 $53.200 10 ye ars Book value of Franchise as of December 31,2017 $478,800

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