Pina Technologies holds a valuable patent (No. 782) for Dance-o-matic, an electronic system that provides individualized, interactive dance instruction that also provides real-time feedback. Pina does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Pina’s patent number 782 is as follows. Date Activity Cost 2011–2012 Research conducted to develop Dance-o-matic $542,000 Oct 2013 Design and construction of prototype 212,000 Feb 2014 Testing of models 65,600 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 251,000 July 2016 Legal fees paid in unsuccessful attempt to broaden the patent’s coverage 22,700 Oct 2018 Research and development activity to advance the real-time feedback component 167,000 Jan 2021 Legal fees paid to successfully defend the patent against a competitor 20,300 Pina 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 December 31. Compute the carrying value of patent No. 782 on each of the following dates: (a) December 31, 2014 $ (b) December 31, 2018 $ (c) December 31, 2021 $
Pina Technologies holds a valuable patent (No. 782) for Dance-o-matic, an electronic system that provides individualized, interactive dance instruction that also provides real-time feedback. Pina does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Pina’s patent number 782 is as follows.
|
Date |
Activity |
Cost |
||
|---|---|---|---|---|
|
2011–2012 |
Research conducted to develop Dance-o-matic |
$542,000 | ||
|
Oct 2013 |
Design and construction of prototype |
212,000 | ||
|
Feb 2014 |
Testing of models |
65,600 | ||
|
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 |
251,000 | |||
|
July 2016 |
Legal fees paid in unsuccessful attempt to broaden the |
|||
|
patent’s coverage |
22,700 | |||
|
Oct 2018 |
Research and development activity to advance the |
|||
|
real-time feedback component |
167,000 | |||
|
Jan 2021 |
Legal fees paid to successfully defend the patent against |
|||
|
a competitor |
20,300 |
Pina 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 December 31.
Compute the carrying value of patent No. 782 on each of the following dates:
|
(a) |
December 31, 2014 |
$ |
||
|---|---|---|---|---|
|
(b) |
December 31, 2018 |
$ |
||
|
(c) |
December 31, 2021 |
$ |
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