Essay on Research Memorandum

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Accounting Regulation and Treatment of Patents XYZ Research Company Case Study You have been hired as a consultant for XYZ Research Co. XYZ Research Co. incorporated in 2010. XYZ ‘s business centers on developing new technology for interplanetary exploration. The company has many patents and has historically expensed all of the costs associated with obtaining their patents. The owners of XYZ Labs are unsure whether or not if any or all of its patent costs can be capitalized. They also are unsure if any impairment testing should be done periodically on their patents. You have been asked by the owners to look into these issues and provide the appropriate accounting treatment for patents. 2014 Accounting Regulation and Treatment of…show more content…
It is with that regards that they have sought out consultation in order to improve the accounting treatment and ensure the book of accounts is compliant with the requirements of the law and any regulatory authority. The objective of this case study is to provide XYZ Research Company with the tools to properly record, amortize and capitalize their patents, all the while having a broad understanding on the importance of impairment testing and what regulations demand to be the subsequent treatment of said patent once deemed impaired. For managements review, below please find the correct accounting treatment. Importance of Financial Accounting: It is important to be aware that financial accounting is an area in accounting where all financial transactions of the corporation are recorded in. It is a process that through time has become the systematic way for record keeping of all off a corporation’s transactions in order to be able to report the data in an efficient manner. It is because of this that is so highly regulated by the reporting authorities. The framework laid out by the IASB. It is within these standards that all the rules and regulations relevant to all aspects of accounting are laid out. These standards are prepared and explained in a very simplified, yet comprehensive manner, in order to allow financial accountants to perform their day to day operations. Moreover, it is to ensure that there is conformity and uniformity in all aspects of
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