On March 17, Advanced Technologies developed a patent related to laser surgery techniques. They spent $1,360,000 to develop the patent internally, consisting of personnel ($880,000), equipment ($348,000), and materials ($132,000). The company also had the following additional costs: $36,000 in legal fees associated with the purchase and filing of the patent, $51,000 to advertise its new laser surgery techniques, and $61,000 to train employees. What is the recorded cost of the patent?

On March 17, Advanced Technologies developed a patent related to laser surgery techniques. They spent $1,360,000 to develop the patent internally, consisting of personnel ($880,000), equipment ($348,000), and materials ($132,000). The company also had the following additional costs: $36,000 in legal fees associated with the purchase and filing of the patent, $51,000 to advertise its new laser surgery techniques, and $61,000 to train employees. What is the recorded cost of the patent?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On March 17, Advanced Technologies purchased a patent related to laser surgery techniques. The purchase price of the patent is $1,220,000. The patent is expected to benefit the company for the next five years. The company had the following additional costs: $22,000 in legal fees associated with the purchase and filing of the patent, $37,000 to advertise its new laser surgery techniques, and $47,000 to train employees. None of these additional costs were included in the purchase price or paid to the seller. Now assume that instead of purchasing the patent, Advanced Technologies spent $1,220,000 to develop the patent internally, consisting of personnel ($810,000), equipment ($306,000), and materials ($104,000). All additional costs were incurred for the same amount. What is the recorded cost of the patent? total capitalized cost=
On March 17, Advanced Technologies purchased a patent related to laser surgery techniques. The purchase price of the patent is $1,360,000. The patent is expected to benefit the company for the next five years. The company had the following additional costs: $36,000 in legal fees associated with the purchase and filling of the patent, $51,000 to advertise its new laser surgery techniques, and $61,000 to train employees. None of these additional costs were included in the purchase price or paid to the seller. Now assume that instead of purchasing the patent, Advanced Technologies spent $1,360,000 to develop the patent internally, consisting of personnel ($880,000), equipment ($348,000), and materials ($132,000). All additional costs were incurred for the same amount. What is the recorded cost of the patent? Total capitalized cost
On March 17, Advanced Technologies purchased a patent related to laser surgery techniques. The purchase price of the patent is $1,250,000. The patent is expected to benefit the company for the next five years. The company had the following additional costs: $25,000 in legal fees associated with the purchase and filing of the patent, $40,000 to advertise its new laser surgery techniques, and $ 50,000 to train employees. None of these additional costs were included in the purchase price or paid to the seller. What is the recorded cost of the patent?
Raymond Stamping Services purchased a stamping machine priced at $21,500. The firm had to pay a sales tax of $1,200 on this purchase. Raymond also paid the inbound transportation charges of $525 on the new machine, as well as a labor cost of $1,350 to install the machine in the factory. In addition, Raymond had to prepare the site before installation at a cost of $2,125. Determine the cost basis for the new machine for depreciation purposes.
Smart Company incurred the following costs in 2021, in relation to developing a machine that will be used in manufacturing a product.Professional fees paid to consultants to conduct market study-----P 250,000Fees paid to engineers and experts for initial research-- 150,000Cost of equipment used for research. The equipment will be used for other research projects. The useful life of the equipment is 5 years----P300,000Legal fees to obtain patent---P100,000Licensing fees paid to the patent office --P 25,000Legal costs paid to defend patent against infringement suit --P 47,000What is the cost of patent?
Parks Inc. had recently completed construction of a new manufacturing facility. Prior to the approval of the building permits, the company operated a parking lot on the land. This parking lot had revenues, net of costs, of $130,000. Construction will take place over an 18-month period. Total construction costs were as follows: Material Labour Incremental overhead General overhead Interest costs on general loan Cost of building permits $ 640,000 1,100,000 240,000 100,000 200,000 40,000 Required: Provide the total amount of construction costs that would be capitalized to the cost of the building using ASPE. Indicate the items that are different as compared to IFRS. (Negative amounts should be indicated by a minus sign.) Capitalized Expensed Material Labour Incremental overhead General overhead Interest costs on general loan Cost of building permits Parking lot operation Total
Smart Company incurred the following costs in 2021, in relation to developing a machine that will be used in manufacturing a product.Professional fees paid to consultants to conduct market study-----P 250,000Fees paid to engineers and experts for initial research-- 150,000Cost of equipment used for research. The equipment will be used for other research projects. The useful life of the equipment is 5 years----P300,000Legal fees to obtain patent---P100,000Licensing fees paid to the patent office --P 25,000Legal costs paid to defend patent against infringement suit --P 47,000How much is the total R&D expense
Sunrise, Inc. manufactures gears as a component for its product. In 2022, Sunrise incurred the following costs in producing 12,000 pieces of gears: direct materials – P120,000; direct labor – P80,000; variable manufacturing overhead – P100,000; fixed manufacturing overhead – P200,000; and fixed non-manufacturing costs – P150,000. Makina Corp. offers to produce the 15,000 pieces of the gear component for Sunrise, Inc. needs in 2023. If the latter (Sunrise) accepts to buy the gears from Makina, 40% of the fixed manufacturing overhead will be avoided, but fixed non-manufacturing costs will not change. At what selling price of each gear from Makina will make Sunrise indifferent on whether to produce or buy the said gear components?
In 2014, Xenex Market Services began development of a customer management software package for their own internal use and incurred $40,000 costs related to conceptual formulation of design alternatives. In 2015, management agreed to fully fund development of the software and spent $120,000 in development costs. In 2016, development was completed after incurring an additional $160,000 in development costs plus another $ 60,000 was spent on training costs for using the software. In 2017, the company started using the software and began amortizing related costs over a 10-year expected useful life. What is the amount of amortization expense for 2017 for this internally-developed software? $32,000 $28,000 $34,000 $38,000
During year 1, Finch Manufacturing Company incurred $115,000,000 of research and development (R&D) costs to create a long-life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in year 1. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $50 per unit. Packaging, shipping, and sales commissions are expected to be $18 per unit. Finch expects to sell 2,500,000 batteries before new research renders the battery design technologically obsolete. During year 1, Finch made 438,000 batteries and sold 392,000 of them. Required a. Identify the upstream and downstream costs. b. Determine the year 1 amount of cost of goods sold and the ending inventory balance that would appear on the financial statements that are prepared in accordance with GAAP. c. Determine the sales price assuming that Finch desires to earn a profit margin that is equal to 30 percent of the total cost of developing, making, and…
During year 1, Perez Manufacturing Company incurred $117,500,000 of research and development (R&D) costs to create a long-life battery to use in computers. In accordance with FASB standards, the entire R&D cost was recognized as an expense in year 1. Manufacturing costs (direct materials, direct labor, and overhead) are expected to be $64 per unit. Packaging, shipping, and sales commissions are expected to be $11 per unit. Perez expects to sell 2,500,000 batteries before new research renders the battery design technologically obsolete. During year 1, Perez made 434,000 batteries and sold 395,000 of them. Fill in the GAAP-based income statement for year 1. Use the sales price = 93.75 PEREZ MANUFACTURING COMPANY Income Statement Sales revenue Cost of goods sold Gross margin Depreciation expense Inventory holding expense Research & development expense Net income (loss) 0 $0 F
Ortega Industries manufactures 15,700 components per year. The manufacturing cost of the components was determined to be as follows: Direct materials $ 154,000 Direct labor 260,000 Variable manufacturing overhead 92,000 Fixed manufacturing overhead 140,000 Total $ 646,000 Assume that the fixed manufacturing overhead reflects the cost of Ortega's manufacturing facility. This facility cannot be used for any other purpose. An outside supplier has offered to sell the component to Ortega for $34. If Ortega Industries purchases the component from the outside supplier, the effect on operating profits would be a: