Exercise 10-26 (Algo) Research and development [LO10-8] In 2021, 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 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 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. the above as 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 field.) View transaction list Journal entry worksheet < 1 2 3 Record the correcting entry for R& D costs. Transaction Note: Enter debits before credits. $3,000,000 880,000 500,000 80,000 400,000 60,000 40,000 $4,960,000 General Journal >
Exercise 10-26 (Algo) Research and development [LO10-8] In 2021, 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 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 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. the above as 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 field.) View transaction list Journal entry worksheet < 1 2 3 Record the correcting entry for R& D costs. Transaction Note: Enter debits before credits. $3,000,000 880,000 500,000 80,000 400,000 60,000 40,000 $4,960,000 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 Z2 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 field.)
View transaction list
Journal entry worksheet
<
1
2
3
Record the correcting entry for R& D costs.
Transaction
Note: Enter debits before credits.
General Journal
$3,000,000
880,000
500,000
80,000
400,000
60,000
40,000
$4,960,000
Debit
Credit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe077dac7-b50e-4974-84ec-4e58090eefc6%2Fe2230a37-3af5-4acb-8e4f-de50248d6a82%2Fi264ra_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 10-26 (Algo) Research and development [LO10-8]
In 2021, 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
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 field.)
View transaction list
Journal entry worksheet
<
1
2
3
Record the correcting entry for R& D costs.
Transaction
Note: Enter debits before credits.
General Journal
$3,000,000
880,000
500,000
80,000
400,000
60,000
40,000
$4,960,000
Debit
Credit
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