In March of 2014, Marian Corp. applied for a trade name. Legal costs associated with the application were $25,000. At the time of filing the application, the company projected extra annual income to be generated through having the trade name to be $100,000. On Feb. 5, 2016, the company incurred $20,000 in an unsuccessful defense of the trade name.
Required:
a.What is the amount of income or expense associated with the trade name for the year 2014? For the year 2015? For the year 2016?
b.What is the accounting rationale for the amounts recorded in each year?

Question

In March of 2014, Marian Corp. applied for a trade name. Legal costs associated with the application were $25,000. At the time of filing the application, the company projected extra annual income to be generated through having the trade name to be $100,000. On Feb. 5, 2016, the company incurred $20,000 in an unsuccessful defense of the trade name.
Required: 
a.What is the amount of income or expense associated with the trade name for the year 2014? For the year 2015? For the year 2016?
b.What is the accounting rationale for the amounts recorded in each year?

Quizplus · Accepted Answer

The Answer of In March of 2014, Marian Corp. applied for a trade name. Legal costs associated with the application were $25,000. At the time of filing the application, the company projected extra annual income to be generated through having the trade name to be $100,000. On Feb. 5, 2016, the company incurred $20,000 in an unsuccessful defense of the trade name.
Required: 
a.What is the amount of income or expense associated with the trade name for the year 2014? For the year 2015? For the year 2016?
b.What is the accounting rationale for the amounts recorded in each year?