Question
During 2015, Oriole Company purchased a building site for its proposed research and development laboratory at a cost of $54,000. Construction of the building was
During 2015, Oriole Company purchased a building site for its proposed research and development laboratory at a cost of $54,000. Construction of the building was started in 2015. The building was completed on December 31, 2016, at a cost of $380,000and was placed in service on January 2, 2017. The estimated useful life of the building for depreciation purposes was 20 years. The straight-line method of depreciation was to be employed, and there was no estimated residual value.
Management estimates that about 50% of the projects of the research and development group will result in long-term benefits (i.e., at least 10 years) to the corporation. The remaining projects either benefit the current period or are abandoned before completion. A summary of the number of projects and the direct costs incurred in conjunction with the research and development activities for 2017 appears below.
Number
of ProjectsSalaries and Employee
BenefitsOther Expenses
(excluding Building
Depreciation Charges)Completed projects with long-term benefits16
$88,000
$51,000
Abandoned projects or projects thatbenefit the current period10
70,000
22,000
Projects in processresults indeterminate6
43,000
19,000
Total32
$201,000
$92,000
Upon recommendation of the research and development group, Oriole Company acquired a patent for manufacturing rights at a cost of $80,000. The patent was acquired on April 1, 2016, and has an economic life of 10 years.
If generally accepted accounting principles were followed, how would the items above relating to research and development activities be reported on the following financial statements?
The company's income statement for 2017.(Do not round intermediate calculations and round final answer to 0 decimal places, e.g. 5,275.)
OrioleCompany
Income Statement (Partial)
Research and Development Expenses
Amortization of Patent
Land
Building-Net
Patent-Net
$
Research and Development Expenses
Amortization of Patent
Land
Building-Net
Patent-Net
LINK TO TEXT
The company's balance sheet as of December 31, 2017.(Do not round intermediate calculations and round final answer to 0 decimal places, e.g. 5,275.)
OrioleCompany
Balance Sheet (Partial)
December 31, 2017
For the Month Ended December 31, 2017
For the Year Ended December 31, 2017
Research and Development Expenses
Amortization Expense
Land
Building-Net
Patent-Net
$
Research and Development Expenses
Amortization Expense
Land
Building-Net
Patent-Net
Research and Development Expenses
Amortization Expense
Land
Building-Net
Patent-Net
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