Satelite Systems modified its model Z2 sateilite to incorporate a new communication device. The company made the following expenditures: 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. 2. How much should Satellite Systems report as research and development expense in the income statement