Answered: e use of

Business

Accounting

e use of

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 7MC

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During 2017, Lyle company incurred P400,000 of research and development costs in its laboratory to develop a product for which a patent was granted on July 1, 2017. Legal fees and other costs associated with the patent totaled P82,000. The estimated economic life of patent is 10 years. What amount should Lyle capitalize for the patent on July 1, 2017?________________________ and what is/are the rules in answering the problem?
Vincenzo Company spent P200,000 on research and development cost for an invention during 2021. On January 1, 2022, the invention was patented at a total cost of P450,000 with and estimated legal life of the patent was 20 years and the estimated useful life was 10 years. In January 2022, Vincenzo paid P250,000 for legal fees in a successful defense of the patent. What should be the amortization expense for 2022?
Van Frank Telecommunications has a patent on a cellular transmission process. The company has amortized thepatent on a straight-line basis since 2014, when it was acquired at a cost of $9 million at the beginning of thatyear. Due to rapid technological advances in the industry, management decided that the patent would benefit thecompany over a total of six years rather than the nine-year life being used to amortize its cost. The decision wasmade at the beginning of 2018.Required:Prepare the year-end journal entry for patent amortization in 2018. No amortization was recorded during the year.
Delaware Company incurred the following research and development costs during 2024: Salaries and wages for lab research Materials used in R&D projects Purchase of equipment Fees paid to third parties for R&D projects Patent filing and legal costs for a developed product Salaries, wages, and supplies for R&D work performed for another company under a contract Total The equipment has a eight-year life and will be used for a number of research projects. Depreciation for 2024 is $190,000. Required: Calculate the amount of research and development expense that Delaware should report in its 2024 income statement. Research and development expense $ 470,000 270,000 970,000 390,000 72,000 420,000 $ 2,592,000
The Lane Company incurred the following expenditures in January 2016: (1) research and development costs of $510,000 that resulted in a new product that was patented during the year, (2) $12,000 in legal fees to have the patent registered, (3) $100,000 in advertising costs to develop a trademark for the newly patented product, (4) Legal fees of $8,000 incurred with the registration of the trademark, which will only be used for five years, and (5) $25,000 of advertising costs to promote its good name. Benefits to be derived from the patent are expected to last for five years. The president believes the promotion of Lane's good name will benefit the firm for three years. How much amortization expense should Lane recognize for 2016?
Natalie Company purchased a machine for P 6, 600, 000 on January 1, 2014 and received a government grant ofP600, 000 towards the capital cost. The policy is to treat the grant as a reduction in the cost of the asset. Themachine is to be depreciated on a straight line basis over 10 years with a residual value of P500, 000. On January 1,2016, the grant became fully repayable because of noncompliance with conditions. What is the depreciation for 2014?a. 610, 000 b. 600, 000 c. 660, 000 d. 550, 000 What is the depreciation for 2016?a. 610, 000 b. 600, 000 c. 780, 000 d. 730, 000
In January of 2021, the Phillips Company purchased a patent at a cost of $100,000. The company estimated a 10-year useful life for the patent and uses the straight-line amortization method. what the amount charged to amortization expense related to the patent for 2021 should be
For each of the following unrelated situations, calculate the annual amortization expense: a. A patent with a 15-year remaining legal life was purchased for $270,000. The patent will be commercially exploitable for another nine years. b. A patent was acquired on a device designed by a production worker. Although the cost of the patent to date consisted of $42,300 in legal fees for handling the patent application, the patent should be commercially valuable during its entire remaining legal life of 18 years and is currently worth $378,000. c. A franchise granting exclusive distribution rights for a new solar water heater within a three-state area for four years was obtained at a cost of $63,000. Satisfactory sales performance over the four years permits renewal of the franchise for another four years (at an additional cost determined at renewal) Annual expense a $ b $ C $
Silver Company purchased a jewel polishing machine for P360,000 on January 1, 2021 and received a government grant of P50,000 towards the capital cost. Company policy is to treat the grant as a reduction in the cost of the asset. The machine was to be depreciated on a straight-line basis over 8 years and was estimated to have a residual value of P5,000 at the end of this period. Under PAS 20, what should be the depreciation expense in respect of the machine for the year ended December 31 2021? a. 38,750 b. 76,250 c. 44,375 d. 38,125
On April 1, 2013, Archer Corporation purchased a new machine on a deferred payment basis. A down payment of $6,000 was made and six monthly installments of $4,000 each are to be made beginning on May 1, 2013. The cash equivalent price of the machine was $28,000. Archer incurred and paid installation costs amounting to $500. The amount to be capitalized as the cost of the machine is a. $28,000b. $22,600c. $28,500d. $24,600
Services Ltd incurred research and development costs of $10 million on a project to develop product A in 2018. The research phase can be clearly distinguished from the development phase of the project. Total costs in the research phase are $6 million, and in the development phase total costs are $4 million. All of the IAS 38 criteria have been met for recognition of the development costs as an asset. Product A was brought to market in Year 2019 and is expected to be marketable for five years. Total sales of Product A are estimated at more than $100 million. Required: Summarize the difference in income, total assets, and total shareholders’ equity related to Product A over its five-year life under the two different sets of accounting rules. Figures need to be presented in a table showing what happens every year to the value and what the value will be at the end of the 5 year life.
Services Ltd incurred research and development costs of $10 million on a project to develop product A in 2018. The research phase can be clearly distinguished from the development phase of the project. Total costs in the research phase are $6 million, and in the development phase total costs are $4 million. All of the IAS 38 criteria have been met for recognition of the development costs as an asset. Product A was brought to market in Year 2019 and is expected to be marketable for five years. Total sales of Product A are estimated at more than $100 million. Required: Explain the research and development expenditure related regulations of IAS and US GAAP. Determine the impact research and development costs have on Services Ltd in 2018 and 2019 income under (1) IFRS and (2) U.S. GAAP. Summarize the difference in income, total assets, and total shareholders’ equity related to Product A over its five-year life under the two different sets of accounting rules.