It is not only important that students think critically and analytically but also have an awareness and understanding of their thinking process (metacognition). By reflecting on that process you can reinforce your strengths and improve those areas where you had difficulty. You recently took a quiz on internally created intangibles. You were required to determine whether to capitalize costs or expense them as research and development. What accounting concept(s) or principle(s) must be applied to correctly solve this problem?

In this metacognition assignment, specifically identify how the financial statements would be affected if the costs related to the patents are not accounted for properly. Specifically identify which element of each statement and how that element was affected. Income Statement Which account(s) are affected? Explain how each is affected. What would be the effect on net income?

Balance Sheet Which account(s) are affected? Explain how each is affected.

When accounting for costs incurred related to internally created intangibles (patents for example), including research and development costs, what must be considered in your analysis.