Your answer is partially correct. Martinez Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Martinez 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 Martinez patent number 758-6002-1A is as follows. Date Activity Cost 2016-2017 Research conducted to develop precipitator $382,000 Jan. 2018 Design and construction of a prototype 85,400 March 2018 Testing of models 57,400 Jan. 2019 Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2019 66,300 Nov. 2020 Engineering activity necessary to advance the design of the precipitator to the manufacturing stage 95,000 Dec. 2021 Legal fees paid to successfully defend precipitator patent 57,400 April 2022 Research aimed at modifying the design of the patented precipitator 58,400 July 2026 Legal fees paid in unsuccessful patent infringement suit against a competitor 36,000 Martinez assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2024, 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. Compute the carrying value of patent No. 758-6002-1A on each of the following dates: a. December 31, 2019 $ 62400
Your answer is partially correct. Martinez Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Martinez 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 Martinez patent number 758-6002-1A is as follows. Date Activity Cost 2016-2017 Research conducted to develop precipitator $382,000 Jan. 2018 Design and construction of a prototype 85,400 March 2018 Testing of models 57,400 Jan. 2019 Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2019 66,300 Nov. 2020 Engineering activity necessary to advance the design of the precipitator to the manufacturing stage 95,000 Dec. 2021 Legal fees paid to successfully defend precipitator patent 57,400 April 2022 Research aimed at modifying the design of the patented precipitator 58,400 July 2026 Legal fees paid in unsuccessful patent infringement suit against a competitor 36,000 Martinez assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2024, 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. Compute the carrying value of patent No. 758-6002-1A on each of the following dates: a. December 31, 2019 $ 62400
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter14: Quality And Environmental Cost Management
Section: Chapter Questions
Problem 28E: Environmental costs are those costs incurred because poor environmental quality exists or may exist....
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Transcribed Image Text:Your answer is partially correct.
Martinez Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution.
Martinez 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 Martinez patent number 758-6002-1A is as follows.
Date
Activity
Cost
2016-2017
Research conducted to develop precipitator
$382,000
Jan. 2018
Design and construction of a prototype
85,400
March 2018
Testing of models
57,400
Jan. 2019
Fees paid engineers and lawyers to prepare patent application;
patent granted June 30, 2019
66,300
Nov. 2020
Engineering activity necessary to advance the design of the
precipitator to the manufacturing stage
95,000
Dec. 2021
Legal fees paid to successfully defend precipitator patent
57,400
April 2022
Research aimed at modifying the design of the patented precipitator
58,400
July 2026
Legal fees paid in unsuccessful patent infringement suit against a
competitor
36,000
Martinez assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2024, 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.
Compute the carrying value of patent No. 758-6002-1A on each of the following dates:
a. December 31, 2019
$
62400
b.
December 31, 2023
$
104000
C.
December 31, 2026
$
41600
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