[The following information applies to the questions displayed below.) Satellite Systems modified its model 22 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total $3,200,000 1,040,000 520,000 320,000 72,000 32,000 $ 5,184,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. Exercise 7-7 (Algo) Part 3 3. What are the basic criteria for determining whether to capitalize or expense intangible related costs? a. The costs of purchased intangible assets are usually b. The costs of internally developed intangible assets are usually

[The following information applies to the questions displayed below.) Satellite Systems modified its model 22 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total $3,200,000 1,040,000 520,000 320,000 72,000 32,000 $ 5,184,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. Exercise 7-7 (Algo) Part 3 3. What are the basic criteria for determining whether to capitalize or expense intangible related costs? a. The costs of purchased intangible assets are usually b. The costs of internally developed intangible assets are usually

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.2.2P: Differential analysis report for machine replacement proposal Catalina Tooling Company is...

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Differential analysis report for machine replacement proposal Catalina Tooling Company is considering replacing a machine that has been used in its factory for two years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows: Annual nonmanufacturing operating expenses and revenue are not expected to be affected by the purchase of the new machine. Instructions List other factors that should be considered before a final decision is reached.
Consider the following information from a company's records for 2020: Materials used in research and development projects $4,500 Equipment acquired that will have alternative future uses in future R&D projects for five years 1,500 Personnel costs of employees involved in R&D projects 5,500 Consulting fees paid to outsiders for R&D projects 2,800 Indirect costs reasonably allocable to R&D projects 250 Legal fees associated with registration of a patent resulting from a 2020 R&D project 2,500 Required:Compute the amount of R&D costs that should be classified as expenses in determining 2020 net income. $ _______
SE9-7 Amortization Expense Smith and Sons obtained a patent for an new optical scanning device. The fees incurred to file for the patent and to defend the patent in court against several companies which challenged the patent amounted to $45,000. Smith & sons concluded that the economic life of the patent was 12 years. Calculate the amortization expense that should be recorded in the second year and record the journal entry for the amortization expense on the books of Smith & sons.
Assume REH AG, a hypothetical company, incurs expenditures of €1,000 per monthduring the fiscal year ended 31 December 2009 to develop software for internal use.Under IFRS, the company must treat the expenditures as an expense until the softwaremeets the criteria for recognition as an intangible asset, after which time the expenditurescan be capitalized as an intangible asset.1. What is the accounting impact of the company being able to demonstrate that thesoftware met the criteria for recognition as an intangible asset on 1 February versus1 December?2. How would the treatment of expenditures diff er if the company reported under U.S.GAAP and it had established in 2008 that the project was likely to be completed?
Lara Company established a new machine for developed basketballs. As the machine is considered very advanced and valuable, the company had it patented. The following expenditures were incurred in developing and patenting the machine. (a) special equipment that was purchased to be used solely for development of the new machine ...................... $182,000 (b) salaries and outlying benefits for engineers and research scientists 17,100 (c) testing prototype ........................... 23,600 (d) Legal fees for filing for patent ................... 12,700 (e) Fees paid to government patent office ............... 2,500 (f) Drawings required by patent office to be filed with patent application .................................. 4,700 Lara Company has chosen to amortize the patent over its legal life. At the beginning of the second year, Lara Company paid $24,000 to successfully defend the patent in an infringement suit. At the beginning of…
EE provided the following information regarding its Research JPB-04 included in the company’s Intangible account as of December 31, 2022: Research JPB-04 is for a research project which consists of the following charges: Salaries of research staff, P18,000 Patent acquired solely for the use in the project, P12,000 Special equipment acquired and useful for various similar research activities, P10,000 Patent acquired for use in several research projects including JPB-04, P16,000 The equipment and patents have been found to be useful for approximately four years. Both the patents and equipment were acquired at the beginning of 2022. How much should be recognized as research and development expense for the year 2022?
Everlasting Corporation provided the following information regarding its Research JPB-04 included in the company’s Intangible account as of December 31, 2022: Research JPB-04 is for a research project which consists of the following charges: Salaries of research staff, P18,000 Patent acquired solely for the use in the project, P12,000 Special equipment acquired and useful for various similar research activities, P10,000 Patent acquired for use in several research projects including JPB-04, P16,000 The equipment and patents have been found to be useful for approximately four years. Both the patents and equipment were acquired at the beginning of 2022. How much should be recognized as research and development expense for the year 2022?
Daggy Company started a research and development project on a new fiber optic cable capable of greaterbandwidth and full duplex voice calls on March 1, 2021. Total cost incurred before reaching technologicalfeasibility amounted to P4,000,000 while development cost after reaching technological feasibility amountedto P5,000,000 before year end.Prior to commercial production, Daggy paid legal and registration fees amounting to P1,000,000 in filing forpatent on the new product on July 1, 2021. Early in January 2022 an additional amount of P2,000,000 wasincurred to develop the project to full manufacturing stage. The patent was approved in early January 2022and valid until December 31, 2041.However, Daddy expected technological advancements will render the new product virtually obsolete byDecember 31, 2026. Daggy planned to develop a new product by that time and apply for a new patent for theupgraded fiber optic cable by the end of 2026. Any capitalized development cost should be amortized…
Candalibra Company incurred the following costs during the year ended December 31, 2022: Laboratory research aimed at discovery of new knowledge $300,000 Costs of testing prototype and design modifications (economic viability not achieved) 55,000 Quality control during commercial production, including routine testing of products 210,000 Construction of research facilities having an estimated useful life of 12 years but no alternative future use 440,000 What is the total amount to be classified and expensed as research and development in 2022 under U.S. GAAP? Group of answer choices $265,000 $795,000 $565,000 $1,005,000
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E10-1 Inclusion in Property, Plant, and Equipment Guthrie Inc. must determine whether the following items are included in property, plant, and equipment: a. idle equipment awaiting sale b. machinery kept on hand and used only when other machinery breaks c. land held for investment d. the right to publish a literary work e. progress payments on a building being constructed by a contractor f. fully depreciated assets still being used g. expenditures to improve leased property h. equipment leased to others i. purchase of an asset with an expected life of 9 months j. obligation to remove leasehold improvement at the termination of a lease Required: 1. Indicate which items are included in the cost of property, plant, and equipment and which items are excluded from the cost of property, plant, and equipment. 2. Next Level For each item excluded from property, plant, and equipment, explain why it was excluded.
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…