Question
During 2010, Salem Company spent $330,000 in research and development costs. As a result of its R&D activities, Salem patented a new product on December
During 2010, Salem Company spent $330,000 in research and development costs. As a result of its R&D activities, Salem patented a new product on December 1, 2010. On December 1, 2010, Salem incurred and paid $12,600 of legal costs related to its new patent. The patent had a five-year legal life. Salem only prepares adjusting journal entries once each year as of 12-31 (year-end).
a) Prepare the entries Salem made in 2010 related to the R&D activities and the patent.
b) Prepare the entries Salem made in 2011 and 2012 related to the patent.
c) On June 30, 2013, Salem spent $10,000 to defend its patent rights. Salems defense was unsuccessful. As a result of the unsuccessful defense, Salem determined its patent was worthless. Prepare the entries Salem made in 2013 related to the patent.
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