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 which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Fields patent number 758-6002-1A is as follows.

Date:

Activity:

Cost:

2009-2011

Research conducted to develop precipitator

$400,000

Jan 1. 2013

Fees paid engineers and lawyers to prepare patent application; patent granted Jan 1, 2012

500,000

Dec 31. 2015

Legal fees paid to successfully defend precipitator patent

74,800

April 1 2016

Research aimed at modifying the design of the patented precipitator

55,000

July 1 2020

Legal fees paid in unsuccessful patent infringement suit against a competitor

34,000

Fields assumed a useful life of

20

years when it received the initial precipitator

patent. On January 1, 2018, it revised its useful life estimate downward to

6

remaining years. Amortization is computed for a full year if the cost is incurred prior to July 1, and no amortization for the year if the cost is incurred after June 30. The company's year ends December 31.

Instructions:

(a) Compute the carrying value of patent No. 758-6002-1A on December 31, 2013.

(b) Compute the carrying value of patent No. 758-6002-1A on December 31, 2017.

(c) Compute the carrying value of patent No. 758-6002-1A on December 31, 2020.