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: 2001-2002Research conducted to develop precipitatorP384,000 Jan 2003Design and construction of a prototype87,600 Mar 2003Testing of models42,000 Jan 2004Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 200059,500 Nov 2005Engineering activity necessary to advance the design of the precipitator to the manufacturing stage81,500 Dec 2006Legal fees paid to successfully defend precipitator patent42,000 May 2007Research aimed at modifying the design of the patented precipitator49,000 Jul 20011Legal fees paid in unsuccessful patent infringement suit against a competitor34,000 Based on execution of a royalty contract in March 2007, the patent is deemed to be economically viable. Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2009, 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.The carrying value of patent No. 758-6002-1A on December 31, 2004? ________The carrying value of patent No. 758-6002-1A on December 31, 2008? ________The carrying value of patent No. 758-6002-1A on December 31, 2011? ________

Cost to obtain patent in Jan 2004 = $59500 Useful life = 17 years Amortisation in year 2011 =…

Answered: The carrying value of patent No.…

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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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:
2001-2002	Research conducted to develop precipitator	P384,000
Jan 2003	Design and construction of a prototype	87,600
Mar 2003	Testing of models	42,000
Jan 2004	Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2000	59,500

Nov 2005	Engineering activity necessary to advance the design of the precipitator to the manufacturing stage	81,500

Dec 2006	Legal fees paid to successfully defend precipitator patent	42,000

May 2007	Research aimed at modifying the design of the patented precipitator	49,000

Jul 20011	Legal fees paid in unsuccessful patent infringement suit against a competitor	34,000

Based on execution of a royalty contract in March 2007, the patent is deemed to be economically viable. Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2009, 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.

The carrying value of patent No. 758-6002-1A on December 31, 2004? ________
The carrying value of patent No. 758-6002-1A on December 31, 2008? ________
The carrying value of patent No. 758-6002-1A on December 31, 2011? ________

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The carrying value of patent No. 758-6002-1A on December 31, 2004? ________ The carrying value of patent No. 758-6002-1A on December 31, 2008? ________ The carrying value of patent No. 758-6002-1A on December 31, 2011? ________

The carrying value of patent No. 758-6002-1A on December 31, 2004? The carrying value of patent No. 758-6002-1A on December 31, 2008? The carrying value of patent No. 758-6002-1A on December 31, 2011?