O 1, 2, 4) Excel (Accounting for Patents) Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufac-ture 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. Occa-sionally it sells a patent. The history of Fields patent number 758-6002-1A is as follows.Date Jan. 2018March 2018 Testing of models Jan. 2019Nov. 2020Dec. 2021 April 2022July 2026 Activity2016–2017 Research conducted to develop precipitator Design and construction of a prototypeFees paid engineers and lawyers to prepare patent application; patent granted June 30, 2019Engineering activity necessary to advance the design of the precipitator to the manufacturing stageLegal fees paid to successfully defend precipitator patent Research aimed at modifying the design of the patented precipitatorLegal fees paid in unsuccessful patent infringement suit against a competitorCost$384,000 87,600 42,000 59,50081,50042,000 43,000 34,000Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2024, 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, 2019. b. December 31, 2023. c. December 31, 2026.
O 1, 2, 4) Excel (Accounting for Patents) Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufac-ture 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. Occa-sionally it sells a patent. The history of Fields patent number 758-6002-1A is as follows.
Date Jan. 2018
March 2018 Testing of models Jan. 2019
Nov. 2020
Dec. 2021 April 2022
July 2026 Activity
2016–2017 Research conducted to develop precipitator Design and construction of a prototype
Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2019
Engineering activity necessary to advance the design of the precipitator to the manufacturing stage
Legal fees paid to successfully defend precipitator patent Research aimed at modifying the design of the patented precipitator
Legal fees paid in unsuccessful patent infringement suit against a competitor
Cost
$384,000 87,600 42,000 59,500
81,500
42,000 43,000 34,000
Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2024, 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, 2019. b. December 31, 2023. c. December 31, 2026.
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