Michele Diaz is the founder of Diaz Manufacturing.  Michele plans to expand her business. Company’s expansion plans require a significant investment, which she plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Company’s financial records are not well maintained. Naturally, the new investors and creditors require organized and detailed financial statements than Michele has previously prepared.  Ms. Diaz has assembled the following information:     

($ millions)

Michele Diaz is ready to meet with Austin Mark, the loan officer for Wells Fargo. She is asking to borrow $30 million.The meeting is to discuss the mortgage options available to the company to finance the new facility.

Austin begins the meeting by discussing a 30-year mortgage. The loan would be repaid in equal monthly installments. Because of the previous relationship between Diaz Manufacturing and the bank, there would be no closing costs for the loan. Austin states that the APR of the loan would be 6.00 percent. Ms. Diaz asks if a shorter mortgage loan is available. Austin says that the bank does have a 20-year mortgage available at the same APR.

Michele decides to ask Austin about a “smart loan” she discussed with a mortgage broker when she was refinancing her home loan. A smart loan works as follows: every two week a mortgage payment is made that is exactly one-half of the traditional monthly mortgage payment. (Hint: To determine how much is bi-weekly payment >>>calculate PMT as if it is 30-year mortgage and then divide by 2). The APR of the smart loan would be the same as the APR of the traditional loan.  

Austin also suggests a bullet loan, or balloon payment, which would result in the greatest interest savings. At Michele’s prompting, he goes on to explain a bullet loan. The monthly payments of a bullet loan would be calculated using a 30-year traditional mortgage. In this case, there would be a 5-year bullet. This would mean that the company would make the mortgage payments for the traditional 30-year mortgage for the first five years, but immediately after the company makes the 60^th payment, the bullet payment would be due. The bullet payment is remaining principal of the loan. Ms. Diaz then asks how the bullet payment is calculated. Austin tells her that the remaining principal can be calculated using an amortization table, but it is also the present value of the remaining 25 years of mortgage payments for the 30-year mortgage.

Michele has also heard of an interest-only loan and asks if this loan is available and what the terms would be. Austin says that the bank offers an interest-only loan with a term of 10 years and an APR of 3.9 percent. He goes on to further explain the terms. The company would be responsible for making interest payments each month on the amount borrowed. No principal payments are required. At the end of the 10-year term, the company would repay the $30 million. However, the company can make principal payments at any time. The principal payments would work just like those on a traditional mortgage. Principal payments would reduce the principal of the loan and reduce the interest due on the next payment.

Tony is still unsure of which loan she should choose. She has asked you to answer the following questions to help her choose the correct mortgage.

1. What are the monthly payments for a 30-year traditional mortgage?

2. What are the payments for a 20-year tradition mortgage?

3. Prepare an amortization table for the first six months of the traditional 30-year loan. How much of the second payment is interest?

4. Assume Diaz Manufacturing takes out a bullet loan under the terms described. What are the payments on the loan?  What is the amount of the last payment of the loan?

5. What are the payments for the interest-only loan?  

6. Which mortgage is the best for the company? Are there any potential risks in this action?

John Ranton, president and founder of Running Mate, could hardly contain his excitement over the operating results for his company's second year of operations. Running Mate is an online retailer of a GPS running watch that records distance, time, speed, heart rate, and a number of other statistics. Ranton's company does not manufacture the watches, but instead purchases them directly from the manufacturer based in China and resells them through its online shopping site.

During the first two years of operation, Ranton decided to hold the selling price of the watch constant at $100 per unit in an effort to attract business. He was also able to negotiate a deal with the supplier to hold Running Mates cost per watch constant at $80 per unit for the two years.

Operating expenses for each of the first two years of operation consist only of advertising expenses and the salaries paid to the website designer/administrator and the company's book keeper. Because Ranton is busy with his numerous other business ventures, the bookkeeper also looks after the day-to-day operations of Running Mate and has sole signing authority to make expenditures on the company's behalf. To motivate his website designer to create a web site that is easy to use and appealing to customers, Ranton decided to pay her a commission equal to 1% of annual sales in both 2015 and 2016. The salaries paid to the website administra tor and the bookkeeper were the same in both years and totalled $92,000. Annual advertising expenses of $8,000 were also the same in both years.

After reviewing the operating results for 2015 (shown below). Ranton roughly calculated the expected sales and expenses for 2016 based on anticipated sales of 10.000 watches at a price of $100 per unit and a cost of $80 per unit. He calculated expected operating expenses in 2016 based on the 2015 cost per unit of $13.75 ($ 1100008000 Based on his calculations (shown below). Ranton expected a 25% improvement in 2016 operating income, in keeping with the increase in unit sales. So, when Running Mate's bookkeeper provided Ranton with the actual results shown below for 2016, he was thrilled. Operating income had improved 50% compared to 2015 on sales growth of 25%.

Sales (units)..

Sales.....

Cost of goods sold.......

Gross margin.

Operating expenses............

Operating income..................................................

2015

8,000 $800.000 640,000

160000 $

50.000

2016

Expected

10,000 $1,000.000 800.000 200.000 137,500 $ 62,500

Actual

10.000 $1.000.000 800.000 125,000 $ 75,000

Ranton has always been an entrepreneur at heart but has no formal training in financial accounting or management accounting. He has always had the bookkeeper prepare annual financial statements.

Required:

1.

2.

Explain the nature of the error made by Ranton when calculating expected operating income for 2016.

Based on the information provided in the case, recalculate the expected results for 2016.

For Ranton's benefit. provide details on the specific items included in operating expenses (advertising, salaries, and commissions). Based on your calculations of the expected results for 2016, are the actual results for 2016 as good as Ranton originally thought? Explain.

The Way I Work: Blake Mycoskie of Toms Shoes

Blake Mycoskie, founder of Toms Shoes, built a lifestyle business based on social entrepreneurship.

Blake Mycoskie doesn't like to sit still. A serial entrepreneur, Mycoskie got the idea for his latest company, Toms Shoes, while on vacation in Argentina. After spending time in several villages in which children didn't own shoes, he created a company -- originally dubbed Shoes for Tomorrow -- in which helping those kids, and others like them, is part of the business plan. For every pair of shoes Toms sells, it donates a new pair to a child in a developing country. In the four years since its founding, the Los Angeles-based company, which has 72 employees, has given away 600,000 pairs of shoes. The company's canvas slip-on shoes -- the same type it often donates -- now sell for $45 to $85 a pair in upscale retailers such as Nordstrom and Bergdorf Goodman.

The more Toms grows, the less time Mycoskie seems to spend in the office. He delegates the day-to-day operation of the company to his management team. That frees him up to spend much of his time traveling -- spreading the Toms gospel, delivering shoes to children in Africa and South America, and taking fairly lengthy vacations. When he is not on the road, Mycoskie, 33, reconnects with employees in quick, focused meetings and in relaxed afternoons on his sailboat.

My schedule varies depending on what city I wake up in. These days, I'm home in L.A. about five or six days a month, and the rest of the time I'm on the road.

I live on a boat in Marina del Rey. When I wake up on the boat, it's very relaxed. I usually get up at 8:30, have a Clif Bar for breakfast, and spend a few hours thinking and writing before going in to the office. Almost every morning I write in my journal. I've been keeping it for a long time -- I've filled more than 50 books. I write about what's going on in my personal and spiritual life or what's going on at work. It helps me keep things in perspective, especially when things get crazy or I get stressed or we have obstacles. When I go back a month later and read what I was feeling, I realize that it wasn't that big of a deal -- we got through it. And that helps me prepare for the next time that I deal with difficult stuff.

Lately, my wake-up call has been around 4:45 a.m., so that I can catch early flights. Often, I'm traveling around the country to speak at companies and universities about our business model. I love teaching people about what we do. My goal is to inspire the next generation of entrepreneurs and company leaders to think differently about how they incorporate giving into their business models. Plus, many of the people who hear me speak eventually purchase a pair of Toms, share the story with others, or support our campaigns like One Day Without Shoes, which has people go barefoot for one day a year to raise awareness about the children we serve. I also travel to meet with organizations like CARE and the World Health Organization. Then I'll go to Ethiopia for three weeks to give away 3,000 pairs of shoes to kids.

I don't get jet lagged that much. I'm so used to traveling and being in different places every day that I can sleep anywhere. I read quite a bit when I'm on the road. I've read a lot of business biographies. I dropped out of college when I was a sophomore, so those were my education in business. I've probably read 40 to 50 of them -- on Michael Eisner, David Geffen, Howard Schultz. Ted Turner's autobiography is really interesting, and so is Sam Walton's. I read that one very early in my career. The great thing about biographies is the subjects have already been successful, so they're not insecure about their failures. Howard Schultz doesn't mind talking about all the dumb things he did when he started Starbucks. Reading about those mistakes taught me a lot.

I also use plane rides to catch up on e-mail. I go through these periods when I won't respond to e-mail for three or four days, and then I'll get on a plane and write 300 e-mails. People who work with me have gotten used to it. And they know when I've landed, because suddenly they'll get a bunch of e-mails from me on a Friday at 10 p.m. My staff members call it the "Toms bomb."

When I'm traveling, I usually send one e-mail a week to the whole staff. I try to stay connected to everyone through letters. Some people call them little manifestoes. I'm a very open person, so I really tell the staff what I'm struggling with and what I'm happy about. I tell them what I think the future of Toms is. I want them to understand what I'm thinking. It's like I'm writing to a best friend.

Anything that really inspires me and that I think is relevant to our overall mission, I try to share with them. Sometimes, I'll tell them about an amazing article I read in a magazine -- about an issue we should challenge ourselves to think about. When I was gone a few months ago, I was reading a lot of Emerson, so I started sending the staff a lot of my favorite Emerson quotes and poems. When I got back, I printed all of the Emerson e-mails and put them in a binder, so everyone could read it throughout the year.

Several times a year, I lead shoe drops in different parts of the world. I'll go with a group of 10 to 15 people -- Toms staff members and volunteers -- to hand out shoes. After an employee is with us for a year, he or she gets to go on a shoe drop. We're giving away shoes in 28 countries now. The shoes not only help kids go to school, but they prevent life-threatening diseases. We're helping to prevent hookworm in Guatemala. In Ethiopia, we're preventing podoconiosis, a disease that can cause the feet and legs to swell to dangerous proportions. Kids get it from walking barefoot on volcanic soil. We're getting more involved in getting the best doctors and clinics there, so we can take it to the next level of prevention.

When I go on shoe drops, I meet with our partners: nonprofits and other organizations involved in public health. They help us give away shoes all year long. We partner with organizations that are already in the community, because they really know what the kids need. They tell me what's working, what they need more help with.

When we're in these countries, we are in the field at least once a day hand-placing shoes on kids' feet. It's really important for us to go back and do that. It's a renewable energy source for me. Seeing the smiles on those kids' faces makes me excited to continue on.

When I'm traveling, I check in with the office occasionally, but I'm not the day-to-day manager. The reason I can travel so much is that I've put together a strong team of about 10 people who pretty much lead the company while I am gone. Candice Wolfswinkel is my chief of staff and the keeper of the culture. Candice has been with me from the beginning, and she tells me what the vibe is like in the office. That's really important to me, because when I'm gone, I can write a letter, but I don't get the feeling of the office.

I'm on the phone a lot with my assistant Megan Memmott, who handles my schedule and requests for meetings. She will even respond to my e-mails for me if something's a high priority. I have an amazing CFO, Jeff Watts, and I'll check in with him twice a week. I talk to my sales managers on a weekly basis. I also call my younger brother Tyler a lot -- he's head of corporate sales. We're eight years apart, so we weren't that close growing up. But when he came out to L.A. in 2006, he started interning at Toms, and since then, we've grown a lot closer. Since I'm gone so much, it's nice having family in the office. I can just call Tyler up and say, "OK, what's the real deal?" and he'll tell me.

When I return to the office, I make sure to hold an all-staff meeting. We all gather on one side of our warehouse. It's a chance for me to tell everyone what I've been doing, where I've been, and usually I have something pretty exciting to share. It's nice to come home and reconnect with my Toms family that way.

When I am in the office, there's a certain energy. Maybe because I'm such an anomaly now. There's all this excitement, and everyone wants to grab me. I have very focused meetings and sign off on things. I like making decisions, but I'm not big on sitting around and talking about ideas. I get bored really quickly in brainstorming meetings. I like it when the creative team has already thought of 10 ideas, and then we can just pick one. I prefer to be involved in the first meeting -- to put my thumbprint on, say, a big marketing initiative or a new design -- and the last meeting.

June and July are slow travel months for me, so I'm in L.A. working in the office four or five days a week. It's a very open office environment. I sit next to the customer service people in a cubicle, just like everyone else. I like to stand up, walk over to people, and find out what they're working on. I bounce around from department to department. Sometimes it's disruptive, I think, but it's just the way I build things.

I usually work until 7 or 8 p.m. In the summertime, I leave early and go sailing almost every day. A lot of times, I'll invite employees to go with me, or I'll bring friends. It's my way of staying connected with my social group in L.A. I'm out there sailing and entertaining people and having a good time.

I'm a pretty social person, so almost every night when I'm in town, I also have some type of dinner or event scheduled. A lot of times, I'll have dinner with one of my employees. For instance, if I haven't had the chance to catch up with my CFO that day, we'll go to dinner. I'm not a late-night person. After 10 p.m., I'm falling asleep. If I'm out at that time, I'll be the one falling asleep at dinner.

For two or three months of the year, I kind of do my own thing. That's one of my dirty little secrets: I take a lot of time off. I went surfing for a month in Costa Rica last November. I went to Uruguay and spent some time there. I'm going to Colorado for three weeks to go fly-fishing. Getting away from work helps me sustain my passion. And I do my best thinking when I'm on vacation. I'm not just sitting on the beach drinking piña coladas. I'm exploring and meeting new people. I'm getting inspired.

Traveling as much as I do, I get lonely sometimes. I have friends now in cities all over the world, so I get to be social, but it's hard to have the deep meaningful relationships, especially an intimate one. With my guy friends, I can show up once a month and go to dinner with them and they're happy. But that doesn't work so well with a girlfriend. Right now, that's a sacrifice I'm making. I do want to have a family -- I'm from a big family. In a year, I think I'll make some different life choices, but I'm just not ready yet.

Contemporary Management McGraw Hill Education 11th ed.

1. How would you describe Blake Mycoskie's leadership style?
2. Would you say that he's a charismatic leader? Why?
3. What sources of power does he have?
4. How does he motivate his followers?

Case Study 2 Construction

Fred’s Sheds

Fred Smith, the founder and chief executive of Fred’s Sheds, received a phone call one afternoon from a local farmer, Mr Jones, requesting a quote to design and build a large storage shed on his property. Fred asked Mr Jones what size and type of shed he would like, when he wanted work to commence, and when he wanted it completed.

Mr Jones told him that he required a large shed, big enough to store his tractor and utility vehicle, and spaces for a workbench, tools and fertilisers.  

He also specified that the shed must have power, water and a toilet. He requested that the shed be made of high quality materials, because twice in the previous ten years some of the other sheds on his property had been damaged by inclement weather, costing him many thousands of dollars in repairs.

Mr Jones wanted work to commence in 6 week’s time and would like the job completed no more than 3 weeks after that so he would have a place to store his vehicles before the winter rains came.

Mr Jones asked Fred to come up with a design and quote to build his shed and asked him to present them to him at a meeting at his house in a week’s time.

He told Fred that he was obtaining three quotes from three different builders, and that he would select his preferred builder based on four criteria.

These were quality, the ability to start and finish on time, and cost.

Mr Jones said he would like to spend no more than $40,000 on the shed, but would consider alternate proposals that were a little higher in price if they could exceed his minimum evaluation criteria.

As soon as Fred hung up the phone his mind started to think of all the different tasks he would need to do to win and complete the job. Having built many sheds before, he was confident he had the project management skills to build a shed that met Mr Jones’s extensive criteria. He jotted down some of his thoughts on a notepad so that he would not forget anything.

First of all, Fred knew he would have to come up with a winning design, so he would need to put his designer, Karen, on the job of coming up with some innovative designs.

Fred would also have to source higher quality building materials than he usually used because, although Fred always used good materials, he thought he would try to use the best possible materials, if it was cost effective, to give him the edge in meeting Mr Jones’s stringent evaluation criteria over his two competitors.

Fred also knew that he would need to plan the human resources necessary to complete the job in the timeframe required. Some of his other construction projects were nearing completion, so it would not be too much of a problem getting some of his construction workers to start in 6 weeks’ time. However, Fred was not sure about the availability of his subcontractors, Eddie the electrician, Bob the plumber, Gary the glazier and Tony his fencing contractor and odd job man, because business was booming and they were all very busy.

If he was successful in winning the contract, Fred knew that there would still be lots of work to be done. After signing the contract, he would need to submit a Development Application and construction certificate to the local council and await their approval.

Mr Jones’s final selections for colour and style of shed materials would need to be finalised and a deposit received prior to commencing work.

Once all that had been accomplished, Fred and his team of four would have to prepare the site for construction. This would involve performing underground cable service checks, and perhaps contracting a surveyor to locate existing boundaries as the shed was going to be built close to the boundary with Mrs Mitchell’s neighbouring property.

The site would need to be cleared, temporary site facilities such as a toilet, site fencing, power and water would have to be established, the site set out and the formwork built. Following this, the site would be excavated.

While the excavation was taking place, Fred would need to remember to book a council inspection for the formwork prior to concreting, as well as booking the concrete truck, a date for the shed to be delivered, a date for the shed installation team to put the shed into place, and dates for his subcontractors to come and install power and water.

After pouring the concrete and finish, his team would need to strip the formwork. At this time Fred could invoice Mr Jones for a progress payment as this represented a milestone in the project. Following this the shed could be delivered and installed,

Eddie the electrician could be called in to connect the mains power, Bob the plumber could connect the water and install the toilet and Gary the glazier could install the windows. While they were busy doing that, Fred and his team could start clearing the site, removing any rubbish and the temporary site amenities.

Once all these tasks were accomplished, the job would be at practical completion. Fred would then meet with Mr Jones, present him with a final bill and handover the keys to the shed. Fred smiled to himself feeling confident that he would beat his two competitors to the job and thinking that he would soon have another satisfied customer.

Complete the project budget in the resources and cost template.

******** I need just a simple example

Resource and Cost Template

Case Study 2 Construction

Fred’s Sheds

Fred Smith, the founder and chief executive of Fred’s Sheds, received a phone call one afternoon from a local farmer, Mr Jones, requesting a quote to design and build a large storage shed on his property. Fred asked Mr Jones what size and type of shed he would like, when he wanted work to commence, and when he wanted it completed.

Mr Jones told him that he required a large shed, big enough to store his tractor and utility vehicle, and spaces for a workbench, tools and fertilisers.  

He also specified that the shed must have power, water and a toilet. He requested that the shed be made of high quality materials, because twice in the previous ten years some of the other sheds on his property had been damaged by inclement weather, costing him many thousands of dollars in repairs.

Mr Jones wanted work to commence in 6 week’s time and would like the job completed no more than 3 weeks after that so he would have a place to store his vehicles before the winter rains came.

Mr Jones asked Fred to come up with a design and quote to build his shed and asked him to present them to him at a meeting at his house in a week’s time.

He told Fred that he was obtaining three quotes from three different builders, and that he would select his preferred builder based on four criteria.

These were quality, the ability to start and finish on time, and cost.

Mr Jones said he would like to spend no more than $40,000 on the shed, but would consider alternate proposals that were a little higher in price if they could exceed his minimum evaluation criteria.

As soon as Fred hung up the phone his mind started to think of all the different tasks he would need to do to win and complete the job. Having built many sheds before, he was confident he had the project management skills to build a shed that met Mr Jones’s extensive criteria. He jotted down some of his thoughts on a notepad so that he would not forget anything.

First of all, Fred knew he would have to come up with a winning design, so he would need to put his designer, Karen, on the job of coming up with some innovative designs.

Fred would also have to source higher quality building materials than he usually used because, although Fred always used good materials, he thought he would try to use the best possible materials, if it was cost effective, to give him the edge in meeting Mr Jones’s stringent evaluation criteria over his two competitors.

Fred also knew that he would need to plan the human resources necessary to complete the job in the timeframe required. Some of his other construction projects were nearing completion, so it would not be too much of a problem getting some of his construction workers to start in 6 weeks’ time. However, Fred was not sure about the availability of his subcontractors, Eddie the electrician, Bob the plumber, Gary the glazier and Tony his fencing contractor and odd job man, because business was booming and they were all very busy.

If he was successful in winning the contract, Fred knew that there would still be lots of work to be done. After signing the contract, he would need to submit a Development Application and construction certificate to the local council and await their approval.

Mr Jones’s final selections for colour and style of shed materials would need to be finalised and a deposit received prior to commencing work.

Once all that had been accomplished, Fred and his team of four would have to prepare the site for construction. This would involve performing underground cable service checks, and perhaps contracting a surveyor to locate existing boundaries as the shed was going to be built close to the boundary with Mrs Mitchell’s neighbouring property.

The site would need to be cleared, temporary site facilities such as a toilet, site fencing, power and water would have to be established, the site set out and the formwork built. Following this, the site would be excavated.

While the excavation was taking place, Fred would need to remember to book a council inspection for the formwork prior to concreting, as well as booking the concrete truck, a date for the shed to be delivered, a date for the shed installation team to put the shed into place, and dates for his subcontractors to come and install power and water.

After pouring the concrete and finish, his team would need to strip the formwork. At this time Fred could invoice Mr Jones for a progress payment as this represented a milestone in the project. Following this the shed could be delivered and installed,

Eddie the electrician could be called in to connect the mains power, Bob the plumber could connect the water and install the toilet and Gary the glazier could install the windows. While they were busy doing that, Fred and his team could start clearing the site, removing any rubbish and the temporary site amenities.

Once all these tasks were accomplished, the job would be at practical completion. Fred would then meet with Mr Jones, present him with a final bill and handover the keys to the shed. Fred smiled to himself feeling confident that he would beat his two competitors to the job and thinking that he would soon have another satisfied customer.

Complete the work breakdown structure (WBS) template.

Work Breakdown Structure Template

Harrison Company issued $600,000 of 10%, 20-year bonds on January 1, 2020. Interest is paid semiannually on July 1 and December 31 each year. Harrison Company uses the straight-line method of amortization for bond premium or discount.

B. Assume the bonds are issued at 100. Provide the journal entries for the issuance of the bonds and the first two interest payments. (3 points)

In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:

Westgate recognizes revenue over time according to percentage of completion.

rev: 09_15_2017_QC_CS-99734

4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.)

On December 31, 2020, Petra Company invests $26,000 in Valery, a variable interest entity. In contractual agreements completed on that date, Petra established itself as the primary beneficiary of Valery. Previously, Petra had no equity interest in Valery. Immediately after Petra’s investment, Valery presents the following balance sheet:

Each of the amounts represents an assessed fair value at December 31, 2020, except for the marketing software.

The December 31 business fair value of Valery is assessed at $104,000.

1. If the carrying amount of the marketing software was undervalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements?

2. If the carrying amount of the marketing software was overvalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements?

If the carrying amount of the marketing software was undervalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements? (Input all amounts as positive values.)

If the carrying amount of the marketing software was overvalued by $31,000, what amounts for Valery would appear in Petra’s December 31, 2020, consolidated financial statements? (Input all amounts as positive values.)

Information concerning Concord Corporation’s intangible assets is as follows. 1. On January 1, 2020, Concord signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $60,000. Of this amount, $12,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $12,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020, of the 4 annual payments discounted at 12% (the implicit rate for a loan of this type) is $36,450. The agreement also provides that 8% of the revenue from the franchise must be paid to the franchisor annually. Concord’s revenue from the franchise for 2020 was $850,000. Concord estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.) 2. Concord incurred $75,000 of experimental and development costs in its laboratory to develop a patent that was granted on January 2, 2020. Legal fees and other costs associated with registration of the patent totaled $20,000. Concord estimates that the useful life of the patent will be 8 years. 3. A trademark was purchased from Shanghai Company for $35,000 on July 1, 2017. Expenditures for successful litigation in defense of the trademark totaling $10,200 were paid on July 1, 2020. Concord estimates that the useful life of the trademark will be 20 years from the date of acquisition.

Prepare a schedule showing the intangible assets section of Concord’s balance sheet at December 31, 2020.