Question
Carson Corporation has a Research and Development (R&D) program where they tend to look into interesting new product ideas suggested by their engineers. In 2020,
Carson Corporation has a Research and Development (R&D) program where they tend to look into interesting new product ideas suggested by their engineers. In 2020, Carson Corp. spent $500,000 on a R&D project, but at the end of the year they could not determine with confidence whether there would be any benefit from the research.
The project was completed in 2021, resulting in a successful patent.The R&D costs in 2021 to complete the project totaled $150,000. Carson spent an additional $25,000 in legal fees to obtain the patent number. The patent has an expected useful life of 5 years.
In 2022, Carson Corp. successfully defended the patent in litigation costing $55,000. The litigation resulted in the extension of the patent life through December31, 2029.
Instructions:Prepare all of the journal entries for Carson Corp. for the years 2020, 2021, and 2022, including any amortization. Assume the straight-line methodand no salvage value. Carsons policy is to take a full years amortization in the year the asset is placed into service.
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