In 2021, Space Technology Company modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work $2,500,000 780,000 Development of a prototype device 400,000 Acquisition of equipment 70,000 Testing and modification of the prototype 300,000 Legal and other fees for patent application on the new communication system Legal fees for successful defense of the new patent Total 50,000 30,000 $4,130,000 Check my work The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $20,000. During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. Required: Prepare correcting entries that reflect the appropriate treatment of the expenditures. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list