Olaf Motors Ltd. decides to create a new line of electric vehicles. The following transactions occurred during the year. Assume that all purchases were made in cash unless specified otherwise.

• Purchased testing equipment that will be used for multiple R&D projects for $350,000 on January 1^st. The equipment has a five-year life. Olaf expects the equipment can be sold for $25,000 at the end of life. The equipment will be depreciated using the straight-line method.
• Paid $134,000 in salaries and wages for testing activities.
• Developed a prototype for a new battery. The prototype cost $230,000 to develop.
• Obtained a patent for the new battery on July 1st. The patent application fee was $25,000. The useful life of the patent is 10 years.
• Acquired Carrots Tech on September 1^st for $300,000. An appraisal of Carrots at acquisition reports land with a fair value of $70,000 and R&D projects with a fair value of $230,000.

A. How much R&D expense does Olaf recognize for the year?

B. What is the carrying value (book value) of the patent at the end of the year?

PLEASE WALKTHROUGH AND SHOW ALL STEPS