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: @ 2 F2 Basic research to develop the technology Engineering design work Development of a prototype device Required: 1. How much should Satellite Systems capitalize in the Patent account in the balance sheet? Patent costs capitalized Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total 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. W S #3 X H 20 F3 E D $ 4 C Q F4 R F do 5 % * 8 J DII F8 M ( 9 K F9 O ) 0 L J F10 P

Aequired infarmation The followng information appiles no me questions desplayed beliow? Satellite Systems modified its mode 22 satelite to incorporate a new commurication derice. The compony made the following expendthures: During your yesc-end roview of the accounts related to intangibles, you discover thut the company has captalaed at costs of the patent. Manogement contends that the device represents an inprovement of the existing communicanion system of the satelice and, therefore, should be capitalized. Aequired: 1. How much should Satellee Systems copitalize in the Patent account in the balance sheet