Required information [The following information applies to the questions displayed below.] Satellite Systems 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 Development of a prototype device Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total $ 4,400,000 1,260,000 640,000 440,000 84,000 44,000 $ 6,868,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. 3. What are the basic criteria for determining whether to capitalize or expense intangible related costs? a. The costs of purchased intangible assets are usually b. The costs of internally developed intangible assets are usually