Problem 12-2Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields 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 Fields patent number 758-6002-1A is as follows.DateActivityCost2008–2009 Research conducted to develop precipitator $382,000Jan. 2010 Design and construction of a prototype 89,000March 2010 Testing of models 40,600Jan. 2011 Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2011 52,700Nov. 2012 Engineering activity necessary to advance the design of the precipitator to the manufacturing stage 84,500Dec. 2013 Legal fees paid to successfully defend precipitator patent 40,600April 2014 Research aimed at modifying the design of the patented precipitator 41,600July 2018 Legal fees paid in unsuccessful patent infringement suit against a competitor 36,000Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2016, 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, 2011 $(b) December 31, 2015 $(c) December 31, 2018 $

Question
Asked Apr 20, 2019
584 views

Problem 12-2
Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields 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 Fields patent number 758-6002-1A is as follows.

Date
Activity
Cost
2008–2009 Research conducted to develop precipitator $382,000
Jan. 2010 Design and construction of a prototype 89,000
March 2010 Testing of models 40,600
Jan. 2011 Fees paid engineers and lawyers to prepare patent application;
patent granted June 30, 2011 52,700
Nov. 2012 Engineering activity necessary to advance the design of the
precipitator to the manufacturing stage 84,500
Dec. 2013 Legal fees paid to successfully defend precipitator patent 40,600
April 2014 Research aimed at modifying the design of the patented precipitator 41,600
July 2018 Legal fees paid in unsuccessful patent infringement suit against a
competitor 36,000

Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2016, 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, 2011
$
(b) December 31, 2015
$
(c) December 31, 2018
$

check_circle

Expert Answer

star
star
star
star
star
1 Rating
Step 1

The question can be answered in the following manner :

Step 2
fullscreen
Step 3
fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Final Accounts for Companies

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Hello, Silverstone's production budget for July called for making 39,800 units of a single product. ...

A: Absorption costing: The absorption costing method is a costing method that allocates the direct prod...

question_answer

Q: Hi, Need help with equation -  Also see attached  Profit=(P x Q - V x Q) - Fixed expenses  Thanks, L...

A: Cost Volume-Profit (CVP) is a management accounting tool that expresses relationship among total sal...

question_answer

Q: Required information   [The following information applies to the questions displayed below.]  Doyle ...

A: Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by...

question_answer

Q: Which of the following is correct? The gain basis for property received by gift is the lesser of th...

A: The tax basis of inherited or gifted property: Various tax rules are given under Federal tax in orde...

question_answer

Q: What is the correct answer for this question?

A: The variances are differences between the budgeted and actual expenses. Spending variances= Actual c...

question_answer

Q: Gunflint adventures operate an airplane service that take fishing parties to a remote lake season la...

A: Determine the age of the airplane in months: 

question_answer

Q: Southwest Corporation issued bonds with the following details:     Face value: $700,000 Inter...

A: Face value of the bond= $700,000Bonds were issued at $103 (103% of par)The Cash received on bond iss...

question_answer

Q: The auditors of Steffey Ltd., decided to study the cash receipts and disbursements for the month of ...

A: The balances as per bank statement and as per general ledger can be reconciled by adding and subtrac...

question_answer

Q: Problem 14-2 Concord Co. is building a new hockey arena at a cost of $2,620,000. It received a downp...

A: 1. Bond issue price= Present value of bonds redemption price + present value of interest annuities p...