7-6

Required information Exercise 7.7 (Algo) Report patent and research and development expense (LO7-2) [The following information applies to the questions displayed below] Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. Exercise 7-7 (Algo) Part 3 3. What are the basic criteria for determining whether to capitalize or exptnse intangible related costs