AstroTech Semiconductor incurred the following costs in 2021 related to a new product design: Research for new semiconductor design Development of the new product Legal and filing fees for a patent for the new design $3,720,000 906, 000 115, 000 $4,741,000 Total The development costs were incurred after technological and commercial feasibility was established and after the future ec benefits were deemed probable. The project was successfully completed, and the new product was patented before the er 2021 fiscal year Required: 1 Calculate the amount of research and development expense (R&D) AstroTech should eport in its 2021U.S. GAAP incom related to this project. 2. Repeat Requirement 1 assuming that Astroledh prepates its financial statements according to International Einancial Rep Standards (IFRS). Research and development expense unde U S. GAAP Research and development expense under IFRS

AstroTech Semiconductor incurred the following costs in 2021 related to a new product design: Research for new semiconductor design Development of the new product Legal and filing fees for a patent for the new design $3,720,000 906, 000 115, 000 $4,741,000 Total The development costs were incurred after technological and commercial feasibility was established and after the future ec benefits were deemed probable. The project was successfully completed, and the new product was patented before the er 2021 fiscal year Required: 1 Calculate the amount of research and development expense (R&D) AstroTech should eport in its 2021U.S. GAAP incom related to this project. 2. Repeat Requirement 1 assuming that Astroledh prepates its financial statements according to International Einancial Rep Standards (IFRS). Research and development expense unde U S. GAAP Research and development expense under IFRS

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter7: Deductions And Losses: Certain Business Expenses And Losses

Section: Chapter Questions

Problem 36P

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Newmarge Products Inc. is evaluating a new design for one of its manufacturing processes. The new design will eliminate the production of a toxic solid residue. The initial cost of the system is estimated at 860,000 and includes computerized equipment, software, and installation. There is no expected salvage value. The new system has a useful life of 8 years and is projected to produce cash operating savings of 225,000 per year over the old system (reducing labor costs and costs of processing and disposing of toxic waste). The cost of capital is 16%. Required: 1. Compute the NPV of the new system. 2. One year after implementation, the internal audit staff noted the following about the new system: (1) the cost of acquiring the system was 60,000 more than expected due to higher installation costs, and (2) the annual cost savings were 20,000 less than expected because more labor cost was needed than anticipated. Using the changes in expected costs and benefits, compute the NPV as if this information had been available one year ago. Did the company make the right decision? 3. CONCEPTUAL CONNECTION Upon reporting the results mentioned in the postaudit, the marketing manager responded in a memo to the internal audit department indicating that cash inflows also had increased by a net of 60,000 per year because of increased purchases by environmentally sensitive customers. Describe the effect that this has on the analysis in Requirement 2. 4. CONCEPTUAL CONNECTION Why is a postaudit beneficial to a firm?
Manny Carson, certified management accountant and controller of Wakeman Enterprises, has been given permission to acquire a new computer and software for the companys accounting system. The capital investment analysis showed an NPV of 100,000. However, the initial estimates of acquisition and installation costs were made on the basis of tentative costs without any formal bids. Manny now has two formal bids, one that would allow the firm to meet or beat the original projected NPV and one that would reduce the projected NPV by 50,000. The second bid involves a system that would increase both the initial cost and the operating cost. Normally, Manny would take the first bid without hesitation. However, Todd Downing, the owner of the firm presenting the second bid, is a close friend. Manny called Todd and explained the situation, offering Todd an opportunity to alter his bid and win the job. Todd thanked Manny and then made a counteroffer. Todd: Listen, Manny, this job at the original price is the key to a successful year for me. The revenues will help me gain approval for the loan I need for renovation and expansion. If I dont get that loan, I see hard times ahead. The financial stats for loan approval are so marginal that reducing the bid price may blow my chances. Manny: Losing the bid altogether would be even worse, dont you think? Todd: True. However, if you award me the job, Ill be able to add personnel. I know that your son is looking for a job, and I can offer him a good salary and a promising future. Additionally, Ill be able to take you and your wife on that vacation to Hawaii that weve been talking about. Manny: Well, you have a point. My son is having an awful time finding a job, and he has a wife and three kids to support. My wife is tired of having them live with us. She and I could use a vacation. I doubt that the other bidder would make any fuss if we turned it down. Its offices are out of state, after all. Todd: Out of state? All the more reason to turn it down. Given the states economy, it seems almost criminal to take business outside. Those are the kind of business decisions that cause problems for people like your son. Required: Evaluate the ethical behavior of Manny. Should Manny have called Todd in the first place? Would there have been any problems if Todd had agreed to meet the lower bid price? Identify the parts of the Statement of Ethical Professional Practice (Chapter 1) that Manny may be violating, if any.
Treasure Land Corporation incurred the following costs in 2020. Cost of laboratory research aimed at discovery of new knowledge $120,000 Cost of testing in search for product alternatives 100,000 Cost of engineering activity required to advance the design of a product to the manufacturing stage 210,000 $430,000 Prepare the necessary 2020 journal entry or entries for Treasure Land.
Mex Inc. incurred the following costs during 2022: Cost of exploration of new formulas $200,000 Laboratory research aimed at discovery of new technology 225,000 Diagnostics for breakdowns during commercial production 150,000 Periodic design changes to existing products 185,000 Significant modification to the formulation of a chemical product 160,000 How much should Mex report as R&D expense for 2022?
The following costs were incurred by Mark Corporation during 2020: Legal fees paid to attorneys in connection with a patent application related to a new invention developed by the company's laboratory personnel: $40,000. Salaries of personnel involved in searching for applications of new research findings: $150,000. Cost of machinery acquired on January 1, 2020: $355,000. The machinery will be used in a current research and development project, as well as several other R&D projects over the next eight years, after which the machine is expected to be sold for $15,000. Mark Corporation uses straight-line depreciation. Costs of design, construction, and testing of preproduction prototypes of potential new product lines for the company: $70,000. Cost of developing a valuable new product that was successfully patented: $100,000. Cost of marketing research to promote the new product: $60,000. Required:Calculate the total research and development expense that should appear in Mark's…
Janson Pharmaceuticals incurred the following costs in 2018 related to a new cancer drug:Research for new formulas $2,425,000Development of a new formula 1,600,000Legal and filing fees for a patent for the new formula 60,000Total $4,085,000The development costs were incurred after technological and commercial feasibility was established and afterthe future economic benefits were deemed probable. The project was successfully completed and the new drugwas patented before the end of the 2018 fiscal year.Required:1. Calculate the amount of research and development expense Janson should report in its 2018 income statementrelated to this project.2. Repeat requirement 1 assuming that Janson prepares its financial statements according to International Financial Reporting Standards.
Marlin Corporation incurred the following costs during the year ended December 31, 2024:Routine, on-going efforts to refine, enrich, & improve upon the qualities of an existing product 125,000Design, construction, and testing of pre-production prototypes and models 110,000 Quality control during commercial production including routine testing of products 150,000 Laboratory research aimed at discovery of new knowledge 180,000How much did Marlin Corporation incur in 2024 as research and development cost? a. 235,000 b. 275,000 c. 290,000 d. 330,000
During 2021, Sheridan Co. incurred the following costs: Testing in search for process alternatives $373000 Costs of marketing research for new product 243000 Modification of the formulation of a process 553000 Research and development services performed by Sunland Corp. for Sheridan 468000 In Sheridan's 2021 income statement, research and development expense should be $1021000. $1637000. $553000. $1394000.
The following costs are incurred by Everlasting Corporation in 2022: a. Cost of activities aiming new knowledge P150,000 b. Cost of developing and producing prototype model 30,000 c. Cost of seminars to introduce the newly develop product 120,000 d. Advertisement cost to introduce the newly develop product 60,000 e. Cost incurred for search of alternatives 35,000 f. Cost of final selection of possible alternatives 50,000 g. Cost of machine acquired to be used only in an R&D project 300,000 h. Cost of engineering follow through in an early phase of commercial production 50,000 i. Adaptation of an existing capability to particular customers need 36,000 j. Salaries of employees involved in R&D 480,000 k. Radical modification to the formulation of a chemical product 40,000 l. Laboratory…
10 In 2019, Flor company incurred the following costs: Laboratory research aimed at discovery of new knowledge 240,000 Cost of testing prototype but economic viability not achieved 60,000 Quality control during commercial production 360,000 Construction of research facility having an estimated useful life Of 5 years but no alternative future use 480,000 What is the total amount of research and development expense for the current year?
Smart Company incurred the following costs in 2021, in relation to developing a machine that will be used in manufacturing a product.Professional fees paid to consultants to conduct market study-----P 250,000Fees paid to engineers and experts for initial research-- 150,000Cost of equipment used for research. The equipment will be used for other research projects. The useful life of the equipment is 5 years----P300,000Legal fees to obtain patent---P100,000Licensing fees paid to the patent office --P 25,000Legal costs paid to defend patent against infringement suit --P 47,000How much is the total R&D expense
Smart Company incurred the following costs in 2021, in relation to developing a machine that will be used in manufacturing a product.Professional fees paid to consultants to conduct market study-----P 250,000Fees paid to engineers and experts for initial research-- 150,000Cost of equipment used for research. The equipment will be used for other research projects. The useful life of the equipment is 5 years----P300,000Legal fees to obtain patent---P100,000Licensing fees paid to the patent office --P 25,000Legal costs paid to defend patent against infringement suit --P 47,000What is the cost of patent?