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 madethe following expenditures:Basic research to develop the technologyEngineering design workDevelopment of a prototype deviceAcquisition of equipmentTesting and modification of the prototypeLegal and other fees for patent application on the new communication systemLegal fees for successful defense of the new patent$2,700,000820,000440,00074,000340,00054,00034,000$4,462,000TotalThe equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $24,000.During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above ascosts of the patent. Management contends that the device simply represents an improvement of the existing communication system ofthe 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.)* Answer is not complete.NoTransactionGeneral JournalDebitCreditResearch and development expense4,500,000 XPatent4,500,000 X Acquisition of equipmentTesting and modification of the prototypeLegal and other fees for patent application on the new communication systemLegal fees for successful defense of the new patent74,000340,00054,00034,000Total$4,462,000The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $24,000.During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above ascosts of the patent. Management contends that the device simply represents an improvement of the existing communication system ofthe 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.)X Answer is not complete.NoTransactionGeneral JournalDebitCredit11Research and development expense4,500,000 XPatent4,500,0002EquipmentPatent3Research and development expenseAccumulated depreciation - equipment

A journal entry is used to document a business deal in a company's accounting records. A 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 c 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 $2,700,000 820,000 440,000 74,000 340,000 54,000 34,000 Total $4,462,000 The oguipmont wrill bo ucod on thi

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 c 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 $2,700,000 820,000 440,000 74,000 340,000 54,000 34,000 Total $4,462,000 The oguipmont wrill bo ucod on thi

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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