Don't use AI. Brief Exercise 10-7 (Algo) Patent; research and development [LO10-1, 10-8]On March 17, Advanced Technologies developed a patent related to laser surgery techniques. They spent $1,230,000 to develop thepatent internally, consisting of personnel ($815,000), equipment ($309,000), and materials ($106,000). The company also had thefollowing additional costs: $23,000 in legal fees associated with the purchase and filing of the patent, $38,000 to advertise its newlaser surgery techniques, and $48,000 to train employees.What is the recorded cost of the patent?Total capitalized cost$ 1,253,000

This exercise is about determining the capitalized cost of a patent developed by Advanced…

Answered: Brief Exercise 10-7 (Algo) Patent;…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 7RE

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Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures:Basic research to develop the technology $ 3,900,000Engineering design work 1,180,000Development of a prototype device 590,000Testing and modification of the prototype 390,000Legal fees for patent application 79,000Legal fees for successful defense of the new patent 39,000Total $ 6,178,000During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized.Required:1. Which of the above costs should Satellite Systems capitalize to the Patent account in the balance sheet?2. Which of the above costs should Satellite Systems report as research and development expense in the income statement?3. What are the basic criteria…
On March 17, Advanced Technologies developed a patent related to laser surgery techniques. They spent $1,200,000 to develop the patent internally, consisting of personnel ($800,000), equipment ($300,000), and materials ($100,000). The company also had the following additional costs: $20,000 in legal fees associated with the purchase and filing of the patent, $35,000 to advertise its new laser surgery techniques, and $45,000 to train employees. What is the recorded cost of the patent?
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The following costs are incurred during the research and development phases of a laser bone scanner Laboratory research aimed at discovery of new knowledge $800,000Search for application of new research findings 400,000Salaries of research staff designing new laser bone scanner 1,200,000Material, labor and overhead costs of prototype laser scanner 850,000Costs of testing prototype and design modifications 450,000Engineering costs incurred to advance the laser scanner to full production stage (technological feasibility reached) 700,000 Identify which of these are development phase items and will be immediately expensed under GAAP and IFRS. GAAP IFRS $1,200,000 $1,200,000 $2,400,000 $1,400,000 $2,400,000 $2,500,000 $3,200,000 $2,500,000
10. Arizona Communications contracted set up a call center for the City of Phoenix. Under the terms of the contract, Arizona Communications will design and set-up a call center with the following costs: Design of call center Computers, servers, telephone equipment $275,000 Software $85,000 Installation and testing of equipment $15,000 Selling commission $25,000 Annual service contract $50,000 $10,000 In addition, Arizona Communications will maintain and service the equipment and software to ensure smooth operations of the call center for an annual fee of $90,000. Ownership of equipment installed remains with the City of Phoenix. The contract costs that should be capitalized is
Date Activity Cost 2011-2012 Research conducted to develop Dance-o-matic $537,000 Oct 2013 Design and construction of prototype 208,000 Feb 2014 Testing of models 65,500 Aug 2014 Costs (engineering and legal fees) associated with patent application; patent granted September 30, 2014 50,400 Mar 2015 Engineering activity to advance the prototype to the manufacturing stage 260,000 July 2016 Legal fees paid in unsuccessful attempt to broaden the patent's coverage 22,900 Oct 2018 Research and development activity to advance the real-time feedback component 162,000 Jan 2021 Legal fees paid to successfully defend the patent against a competitor 20,400 Swifty assumed a useful life of 14 years when it received the initial patent. On January 1, 2019, it revised its useful life estimate downward to 6 remaining years. Amortization is computed for a full year if the cost is incurred prior to July 1, and no amortization for the year if the cost is incurred after June 30. The company's year ends…
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In 2018, Space Technology Company modified its model Z2 satellite to incorporate a new communication device.The company made the following expenditures:Basic research to develop the technology $2,000,000Engineering design work 680,000Development of a prototype device 300,000Acquisition of equipment 60,000Testing and modification of the prototype 200,000Legal and other fees for patent application on the new communication system 40,000Legal fees for successful defense of the new patent 20,000Total $3,300,000The equipment will be used on this and other research projects. Depreciation on the equipment for 2018 is $10,000.During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized.Required:Prepare correcting entries that reflect the…
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