Don't use AI. Brief Exercise 10-7 (Algo) Patent; research and development [LO10-1, 10-8]On March 17, Advanced Technologies developed a patent related to laser surgery techniques. They spent $1,230,000 to develop thepatent internally, consisting of personnel ($815,000), equipment ($309,000), and materials ($106,000). The company also had thefollowing additional costs: $23,000 in legal fees associated with the purchase and filing of the patent, $38,000 to advertise its newlaser surgery techniques, and $48,000 to train employees.What is the recorded cost of the patent?Total capitalized cost$ 1,253,000

This exercise is about determining the capitalized cost of a patent developed by Advanced…

Answered: Brief Exercise 10-7 (Algo) Patent;…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 7RE

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On March 17, Advanced Technologies developed a patent related to laser surgery techniques. They spent $1,200,000 to develop the patent internally, consisting of personnel ($800,000), equipment ($300,000), and materials ($100,000). The company also had the following additional costs: $20,000 in legal fees associated with the purchase and filing of the patent, $35,000 to advertise its new laser surgery techniques, and $45,000 to train employees. What is the recorded cost of the patent?
The following costs are incurred during the research and development phases of a laser bone scanner Laboratory research aimed at discovery of new knowledge $800,000Search for application of new research findings 400,000Salaries of research staff designing new laser bone scanner 1,200,000Material, labor and overhead costs of prototype laser scanner 850,000Costs of testing prototype and design modifications 450,000Engineering costs incurred to advance the laser scanner to full production stage (technological feasibility reached) 700,000 Identify which of these are development phase items and will be immediately expensed under GAAP and IFRS. GAAP IFRS $1,200,000 $1,200,000 $2,400,000 $1,400,000 $2,400,000 $2,500,000 $3,200,000 $2,500,000
Maxtor Technology incurred the following costs during the year related to the creation of a new type of personal computer monitor: Salaries $220,000 Depreciation on R&D facilities and equipment Utilities and other direct costs incurred for the R&D facilities Patent filing and related legal costs Payment to another company for performing a portion of the development work Costs of adapting the new monitor for the specific needs of a 125,000 66,000 22,000 120,000 80,000 customer What amount should Maxtor report as research and development expense in its income statement?
10. Arizona Communications contracted set up a call center for the City of Phoenix. Under the terms of the contract, Arizona Communications will design and set-up a call center with the following costs: Design of call center Computers, servers, telephone equipment $275,000 Software $85,000 Installation and testing of equipment $15,000 Selling commission $25,000 Annual service contract $50,000 $10,000 In addition, Arizona Communications will maintain and service the equipment and software to ensure smooth operations of the call center for an annual fee of $90,000. Ownership of equipment installed remains with the City of Phoenix. The contract costs that should be capitalized is
P10-7 Self-Construction Olson Machine Company manufactures small and large milling machines. Selling prices of these machines range from $35,000 to $200,000. During the 5-month period from August 1, 2019, through December 31, 2019, Olson manufactured a milling machine for its own use. This machine was built as part of the regular production activities. The project required a large amount of time from planning and supervisory person-nel, as well as that of some of the company’s officers, because it was a more sophisticated type of machine than the regular production models. Throughout the 5-month period, Olson charged all costs directly associated with the construction of the machine to a special account entitled “Asset Construction Account.” An analysis of the charges to this account as of December 31, 2019, follows:
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In 2018, Space Technology Company modified its model Z2 satellite to incorporate a new communication device.The company made the following expenditures:Basic research to develop the technology $2,000,000Engineering design work 680,000Development of a prototype device 300,000Acquisition of equipment 60,000Testing and modification of the prototype 200,000Legal and other fees for patent application on the new communication system 40,000Legal fees for successful defense of the new patent 20,000Total $3,300,000The equipment will be used on this and other research projects. Depreciation on the equipment for 2018 is $10,000.During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized.Required:Prepare correcting entries that reflect the…
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NXS Semiconductor prepares its financial statements according to International Financial Reporting Standards.The company incurred the following expenditures during 2018 related to the development of a chip to be used inmobile devices:Salaries and wages for basic research $3,450,000Materials used in basic research 330,000Other costs incurred for basic research 1,220,000Development costs 1,800,000Legal and filing fees for a patent for the new technology 50,000The development costs were incurred after NXS established technological and commercial feasibility and afterNXS deemed the future economic benefits to be probable. The project was successfully completed, and the newchip was patented near the end of the 2018 fiscal year.Required:1. Which of the expenditures should NXS expense in its 2018 income statement?2. Explain the accounting treatment of the remaining expenditures.

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