Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Fields patent number 758-6002-1A is as follows. Date Activity Cost 2011–2012 Research conducted to develop precipitator $384,000 Jan. 2013 Design and construction of a prototype 87,600 March 2013 Testing of models 42,000 Jan. 2014 Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2014 59,500 Nov. 2015 Engineering activity necessary to advance the design of the precipitator to the manufacturing stage 81,500 Dec. 2016 Legal fees paid to successfully defend precipitator patent 42,000 April 2017 Research aimed at modifying the design of the patented precipitator 43,000 July 2021 Legal fees paid in unsuccessful patent infringement suit against a competitor 34,000 Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2019, it revised its useful life estimate downward to 5 remaining years. Amortization is computed for a full year if the cost is incurred prior to July 1, and no amortization for the year if the cost is incurred after June 30. The company's year ends December 31. Instructions Compute the carrying value of patent No. 758-6002-1A on each of the following dates: a.December 31, 2014. b.December 31, 2018. c.December 31, 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Fields patent number 758-6002-1A is as follows.

Date	Activity	Cost
2011–2012	Research conducted to develop precipitator	$384,000
Jan. 2013	Design and construction of a prototype	87,600
March 2013	Testing of models	42,000
Jan. 2014	Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2014	59,500
Nov. 2015	Engineering activity necessary to advance the design of the precipitator to the manufacturing stage	81,500
Dec. 2016	Legal fees paid to successfully defend precipitator patent	42,000
April 2017	Research aimed at modifying the design of the patented precipitator	43,000
July 2021	Legal fees paid in unsuccessful patent infringement suit against a competitor	34,000

Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2019, it revised its useful life estimate downward to 5 remaining years. Amortization is computed for a full year if the cost is incurred prior to July 1, and no amortization for the year if the cost is incurred after June 30. The company's year ends December 31.

Instructions

Compute the carrying value of patent No. 758-6002-1A on each of the following dates:

a.December 31, 2014.
b.December 31, 2018.
c.December 31, 2021.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Continuous and Computer Assisted Audit Techniques (CAAT)

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions