(L01,2,5) (Accounting for Patents) During 2013, Winston Corporation spent $170,000 in research and development costs. As a...
Question:
(L01,2,5) (Accounting for Patents) During 2013, Winston Corporation spent $170,000 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2013, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $18,000 related to the patent were incurred as of October 1, 2013.
Instructions
(a) Prepare all journal entries required in 2013 and 2014 as a result of the transactions above.
(b) On June 1, 2015, Winston spent $9,480 to successfully prosecute a patent infringement suit. As a result, the estimate of useful life was extended to 12 years from June 1, 2015. Prepare all journal entries required in 2015 and 2016.
(c) In 2017, Winston determined that a competitor’s product would make the New Age Piano obsolete and the patent worthless by December 31, 2018. Prepare all journal entries required in 2017 and 2018.
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