Exercise 10-26 (Algo) Research and development [LO10-8] In 2021, Space Technology Company 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 Acquisition of equipment Testing and modification of the prototype Legal and other fees for patent application on the new communication system Legal fees for successful defense of the new patent Total The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $30,000. 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 appropriate treatment of the expenditures. (If no entry is required for a transaction/event, select "No journal entry required" In the first account fleld.) View transaction list 1 Record the correcting entry for R&D costs. 2 Record the correcting entry for the equipment, if any. 3 Record the correcting entry to record depreciation on equipment used in R&D projects. Note : = journal entry has been entered Record entry Clear entry $3,000,000 880,000 500,000 80,000 400,000 60,000 40,000 $4,960,000 Credit View general journal
Exercise 10-26 (Algo) Research and development [LO10-8] In 2021, Space Technology Company 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 Acquisition of equipment Testing and modification of the prototype Legal and other fees for patent application on the new communication system Legal fees for successful defense of the new patent Total The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $30,000. 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 appropriate treatment of the expenditures. (If no entry is required for a transaction/event, select "No journal entry required" In the first account fleld.) View transaction list 1 Record the correcting entry for R&D costs. 2 Record the correcting entry for the equipment, if any. 3 Record the correcting entry to record depreciation on equipment used in R&D projects. Note : = journal entry has been entered Record entry Clear entry $3,000,000 880,000 500,000 80,000 400,000 60,000 40,000 $4,960,000 Credit View general journal
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![Exercise 10-26 (Algo) Research and development [LO10-8]
In 2021, Space Technology Company 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
Acquisition of equipment
Testing and modification of the prototype
Legal and other fees for patent application on the new communication system
Legal fees for successful defense of the new patent
Total
The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $30,000.
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 appropriate treatment of the expenditures. (If no entry is required for a transaction/event,
select "No journal entry required" In the first account fleld.)
View transaction list
1 Record the correcting entry for R&D costs.
2 Record the correcting entry for the equipment, if any.
3 Record the correcting entry to record depreciation on
equipment used in R&D projects.
Note :
= journal entry has been entered
Record entry
Clear entry
$3,000,000
880,000
500,000
80,000
400,000
60,000
40,000
$4,960,000
Credit
View general journal](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F05c29da8-5e07-472c-a295-a56e55cdcfad%2F790dd5cd-706a-446a-8580-286759f7bd1c%2Fz6teys_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 10-26 (Algo) Research and development [LO10-8]
In 2021, Space Technology Company 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
Acquisition of equipment
Testing and modification of the prototype
Legal and other fees for patent application on the new communication system
Legal fees for successful defense of the new patent
Total
The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $30,000.
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 appropriate treatment of the expenditures. (If no entry is required for a transaction/event,
select "No journal entry required" In the first account fleld.)
View transaction list
1 Record the correcting entry for R&D costs.
2 Record the correcting entry for the equipment, if any.
3 Record the correcting entry to record depreciation on
equipment used in R&D projects.
Note :
= journal entry has been entered
Record entry
Clear entry
$3,000,000
880,000
500,000
80,000
400,000
60,000
40,000
$4,960,000
Credit
View general journal
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