Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 10, Problem 10.16BE
Research and development
• LO10–8
Maxtor Technology incurred the following costs during the year related to the creation of a new type of personal computer monitor:
| Salaries | $220,000 |
| 125,000 | |
| Utilities and other direct costs incurred for the R&D facilities | 66,000 |
| Patent filing and related legal costs | 22,000 |
| Payment to another company for performing a portion of the development work | 120,000 |
| Costs of adapting the new monitor for the specific needs of a customer | 80,000 |
What amount should Maxtor report as research and development expense in its income statement?
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Maxtor Technology incurred the following costs during the year related to the creation of a new type of personal
computer monitor:
Salaries
$220,000
Depreciation on R&D facilities and equipment
Utilities and other direct costs incurred for the R&D facilities
Patent filing and related legal costs
Payment to another company for performing a portion of the
development work
Costs of adapting the new monitor for the specific needs of a
125,000
66,000
22,000
120,000
80,000
customer
What amount should Maxtor report as research and development expense in its income statement?
22
The cost of the wicketer machine is as follows:
Purchase Price
R70 000
Installation
R15 000
Staff Training
R6 500
The machine has a useful life of 10 years and management's policy is to revalue the machine
every two years from the date of purchase. The entity adopts the elimination method for
revaluations. The machine is depreciated on a straight-line basis.
An independent valuator who is a competent industry expert has determined the fair value of the
machine to be R90 000 on the 2nd anniversary of the purchase of the machine.
The Financial Director has also approved a policy that the revaluation surplus may be transferred
to retained earnings as the asset is used.
Required:
Show all current year journal entries in respect of the Wicketer Machine up until
the year ended 30 June 2022.
Journal Narrations are required.
Round all figures to the nearest Rand.
Q.1.2
Brief Exercise 10-7 (Algo) Patent; research and development [LO10-1, 10-8]
On March 17, Advanced Technologies purchased a patent related to laser surgery techniques. The purchase price of the patent is
$1,230,000. The patent is expected to benefit the company for the next five years. The company had the following additional costs:
$23,000 in legal fees associated with the purchase and filing of the patent, $38,000 to advertise its new laser surgery techniques, and
$48,000 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 $1,230,000 to develop the patent internally, consisting of personnel
($815,000), equipment ($309,000), and materials ($106,000). All additional costs were incurred for the same amount.
What is the recorded cost of the patent?
> Answer is complete but not entirely correct.
Total capitalized cost
$ 2,483,000
Chapter 10 Solutions
Intermediate Accounting, 10 Ed
Ch. 10 - Prob. 10.1QCh. 10 - Prob. 10.2QCh. 10 - Prob. 10.3QCh. 10 - Prob. 10.4QCh. 10 - Prob. 10.5QCh. 10 - Prob. 10.6QCh. 10 - When an asset is acquired and a note payable is...Ch. 10 - Explain how assets acquired in exchange for equity...Ch. 10 - Prob. 10.9QCh. 10 - What account is credited when a company receives...
Ch. 10 - Prob. 10.11QCh. 10 - Identify the two exceptions to valuing property,...Ch. 10 - In what situations is interest capitalized?Ch. 10 - Define average accumulated expenditures and...Ch. 10 - Explain the difference between the specific...Ch. 10 - Prob. 10.16QCh. 10 - Prob. 10.17QCh. 10 - Explain the accounting treatment of costs incurred...Ch. 10 - Explain the difference in the accounting treatment...Ch. 10 - Prob. 10.20QCh. 10 - Prob. 10.21QCh. 10 - Prob. 10.22QCh. 10 - Prob. 10.23QCh. 10 - Acquisition cost; machine LO101 Beavert on Lumber...Ch. 10 - Prob. 10.2BECh. 10 - Prob. 10.3BECh. 10 - Cost of a natural resource; asset retirement...Ch. 10 - Asset retirement obligation LO101 Refer to the...Ch. 10 - Prob. 10.6BECh. 10 - Prob. 10.8BECh. 10 - Prob. 10.11BECh. 10 - Nonmonetary exchange LO106 Refer to the situation...Ch. 10 - Nonmonetary exchange LO106 Refer to the situation...Ch. 10 - Prob. 10.14BECh. 10 - Prob. 10.15BECh. 10 - Research and development LO108 Maxtor Technology...Ch. 10 - Prob. 10.18BECh. 10 - Prob. 10.19BECh. 10 - Research and development; various types LO108...Ch. 10 - Prob. 10.21BECh. 10 - Acquisition cost; equipment LO101 Oaktree Company...Ch. 10 - Prob. 10.3ECh. 10 - Prob. 10.7ECh. 10 - Prob. 10.8ECh. 10 - Acquisition costs; noninterest-bearing note ...Ch. 10 - Prob. 10.11ECh. 10 - Prob. 10.14ECh. 10 - Nonmonetary exchange LO106 [This is a variation...Ch. 10 - Prob. 10.16ECh. 10 - Nonmonetary exchange LO106 [This is a variation...Ch. 10 - Prob. 10.18ECh. 10 - Prob. 10.19ECh. 10 - Prob. 10.20ECh. 10 - FASB codification research LO101, LO106, LO107,...Ch. 10 - Prob. 10.30ECh. 10 - Prob. 10.31ECh. 10 - Prob. 10.32ECh. 10 - Intangibles; start-up costs LO101, LO108 Freitas...Ch. 10 - Prob. 10.1PCh. 10 - Prob. 10.4PCh. 10 - Acquisition costs; journal entries LO101, LO103,...Ch. 10 - Prob. 10.6PCh. 10 - Prob. 10.8PCh. 10 - Prob. 10.9PCh. 10 - Judgment Case 101 Acquisition costs LO101, LO103,...Ch. 10 - Judgment Case 104 Interest capitalization LO107...Ch. 10 - Prob. 10.6DMPCh. 10 - Prob. 10.7DMPCh. 10 - Judgment Case 108 Research and development LO108...Ch. 10 - Prob. 10.9DMPCh. 10 - Prob. 10.11DMPCh. 10 - Prob. 10.13DMPCh. 10 - Prob. 10.15DMPCh. 10 - Prob. 10.16DMP
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