Question
Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the
Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes that it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells one of its patents. The history of Fields patent number 758-6002-1A is as follows.
2011 2012 | Research conducted to develop precipitator | $369,000 | ||
Jan. 3, 2013 | Design and construction of a prototype (capitalization criteria not yet met) | 86,600 | ||
Mar. 15, 2013 | Testing of models (capitalization criteria not yet met) | 43,200 | ||
Jan. 4, 2014 | Fees paid to engineers and lawyers to prepare patent application; patent granted January 4, 2014 | 52,700 | ||
Nov. 30, 2015 | Engineering activity necessary to advance the design of the precipitator to the manufacturing stage | 82,000 | ||
Dec. 31, 2016 | Legal fees paid to successfully defend precipitator patent | 42,000 | ||
Apr. 15, 2017 | Research aimed at modifying the design of the patented precipitator | 43,000 | ||
July 31, 2021 | Legal fees paid in unsuccessful patent infringement suit against a competitor | 35,000 |
Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2019, it revised its useful life estimate downward to five remaining years. The company's year ends December 31. Fields follows IFRS for reporting purposes.
- calculate the carrying value of patent No. 758-6002-1A on December 31, 2014.
- calculate the carrying value of patent No. 758-6002-1A on December 31, 2018.
- Calculate the carrying value of patent No. 758-6002-1A on December 31, 2021.
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