E12-3B (Classification Issues—Intangible Asset) Williams Inc. has the following amounts included in its general ledger at the end of the current year. Organization costs $120,000 Trademarks 150,000 Discount on bonds payable 45,000 Deposits with advertisin

E12-3B (Classification Issues—Intangible Asset) Williams Inc. has the following amounts included in its general ledger at the end of the current year.

Organization costs                                                                                                   $120,000

Trademarks                                                                                                                150,000

Discount on bonds payable                                                                                         45,000

Deposits with advertising agency for ads to promote goodwill of company              25,000

Excess of cost over fair value of net identifiable assets of acquired subsidiary    750,000

Cost of equipment acquired for research and development projects; the

equipment has an alternative future use                                                                   300,000

Costs of developing a secret formula for a product that is expected to

be marketed for at least 20 years                                                                             800,000

Instructions

(a) On the basis of the information above, compute the total amount to be reported by Williams for intangible assets on its balance sheet at year-end. Equipment has alternative future use.

(b) If an item is not to be included in intangible assets, explain its proper treatment for reporting

purposes.