Question
P12-2 (LO1,2,4,5) EXCEL (Accounting for Patents) Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields
P12-2 (LO1,2,4,5) EXCEL (Accounting for Patents) 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 |
20082009 | Research conducted to develop precipitator | $384,000 |
Jan. 2010 | Design and construction of a prototype | 87,600 |
Mar-10 | Testing of models | 42,000 |
Jan. 2011 | Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2011 | 59,500 |
Nov. 2012 | Engineering activity necessary to advance the design of the precipitator to the manufacturing stage | 81,500 |
Dec. 2013 | Legal fees paid to successfully defend precipitator patent | 42,000 |
Apr-14 | Research aimed at modifying the design of the patented precipitator | 43,000 |
Jul-18 | Legal fees paid in unsuccessful patent infringement suit against a competitor | 34,000 |
Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2016, it revised its useful life estimate downward to 5 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
Compute the carrying value of patent No. 758-6002-1A on each of the following dates:
(a) December 31, 2011.
(b) December 31, 2015.
(c) December 31, 2018.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started