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: Basie 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 succesatul defense of the new patent Total $3,400,000 1,080,000 540,000 340,000 74,000 34,000 $5,468,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as 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. Required: 1. Determine the amount Satellite Systems should capitalize to the Patent account in the balance sheet Patent costs capitalized