Ramirez Stores purchased a trademark at the beginning of 2016 for $340,000.Economic benefits were expected for 10 years, but the trademark's legal life was 20 years.Also, during 2016, Ramirez incurred research and development costs of $200,000.The book value of the trademarks at December 31, 2016, is

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The book value of the trademark at December 31, 2016, would be $306,000. This is calculated by taking the initial cost of the trademark ($340,000) and subtracting one year's worth of amortization. Since the economic benefits are expected for 10 years, the annual amortization expense is $34,000 ($340,000 / 10 years). Thus, $340,000 - $34,000 = $306,000. Research and development costs are expensed as incurred and do not affect the book value of the trademark.

Ramirez Stores Purchased a Trademark at the Beginning of 2016