Question
Crane Company from time to time embarks on research program when a special project seems to offer possibilities. In 2016 the company expands $331,500 on
Crane Company from time to time embarks on research program when a special project seems to offer possibilities. In 2016 the company expands $331,500 on a research project, but by the end of 2016 it is impossible to determine whether any benefit will be derived from it.
The project is completed in 2017, and a successful patent is obtained. The R&D cost to complete the project are $ 121,500. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2017 total $18,300. The patent has an expected useful life of 5 years. Record theses costs in journal entry form. Also record patent amortization (full year) in 2017.
Account titles and explanation Debit Credit
_____________________________ __________________ __________________
_____________________________ _________________________ _________________________
(To record research and development costs)
______________________________________ ____________________________ ______________________________
________________________________________ ____________________________ _____________________________
(to record legal and administrative cost)
_______________________________________ _______________________________ ____________________________
_____________________________________ ________________________________ _____________________________
(to record one year's amortization expenses)
In 2018, the company successfully defends the patent in extended litigation at a cost of $58,400, thereby extending the patent life to December 31, 2025. What is the proper was to account for this cost? Also, record patent amortization (full year) in 2018.
Account Titles and explanation Debit Credit
________________________________ _______________________ _______________________
________________________________ _______________________ _________________________
(to record legal cost of successfully defending patent)
_________________________________ _____________________________ ____________________________
________________________________ ______________________________ ____________________________
(To record one years amortization)
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