research and development expense of Soundgarden Co. includes which of the following items: 1) Costs of advertising a newly invented product. 2) Billings received by Soundgarden from Black Hole Sun Co. for research activities performed by Black Hole Sun Co. for Soundgarden. 3) The depreciation on a building used in various R&D projects 4) Billings sent by Soundgarden to Ugly Kid Joe Co. for research activities performed by Soundgarden for Ugly Kid Joe Co. 5) Costs of materials, labor and overhead incurred in generating a patent. The patent was granted to Soundgarden during the period. 6) Overhead costs properly allocated to the research and development activities performed by Soundgarden during the period. 7) Training costs of Soundgarden’s employees who are directly involved in R&D projects. 8) The amortization of patents used in Soundgarden’s research activities.

Danube, Toggle, and ConnectOn rely on various intangible assets to operate their businesses. These companies amortize the cost of these assets using the straight-line method over the following average estimated useful lives (in years), as reported in their annual reports. Type of Intangible Asset Developed Technology Danube 5.4 Trade Names 5.9 Toggle 5.6 10.1 ConnectOn 3.5 11.5 Customer Relationships 5.1 5.5 7.5 Required: 1. Based on these estimates, identify the company that uses the longest periods for amortizing most of its classes of intangible assets. Toggle Danube ConnectOn 2. Will these estimates increase or decrease that company's net income relative to its competitors? Increase Decrease

As a result of FASB Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed," most software production costs are likely to be a. expensed as R&D costsb. allocated to inventory and expensed to cost of goods sold when the software is soldc. capitalized and amortized over a 40-year periodd. capitalized and amortized over a relatively short period, such as five years

XYZ Ltd. is a manufacturing company that produces specialized machinery. The company has been in business for the last 10 years and has always used the straight-line method of depreciation to calculate the depreciation expense for its machinery. However, the company's financial controller has recently proposed that they switch to the double- declining balance method instead. The financial controller argues that this method would result in a more accurate depreciation expense calculation and better reflect the actual usage of the machinery over time. Questions: 1. What is the straight-line method of depreciation? 2. What is the double-declining balance method of depreciation? 3. What are the advantages and disadvantages of using the straight-line method? 4. What are the advantages and disadvantages of using the double-declining balance method? 5. Should XYZ Ltd. switch to the double-declining balance method of depreciation? Why or why not?