Exercise 12-9

During 2013, Sheffield Corporation spent $165,600 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2013, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $41,040 related to the patent were incurred as of October 1, 2013.

Part A: Prepare all journal entries required in 2013 and 2014 as a result of the transactions above.

a.) 2013 - To record research and development expenses

b.) 2013 - To record legal expenses

c.) 2013 - To record amortization expense

d.) 2014 entry

Part B: On June 1, 2015, Sheffield spent $30,240 to successfully prosecute a patent infringement suit. As a result, the estimate of useful life was extended to 12 years from June 1, 2015. Prepare all journal entries required in 2015 and 2016.

a.) 2015 - To record patents

b.) 2015 - To record amortization expense

c.) 2016 entry

Part C: In 2017, Sheffield determined that a competitors product would make the New Age Piano obsolete and the patent worthless by December 31, 2018. Prepare all journal entries required in 2017 and 2018.**One debit and one credit**